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When these people say they "need" this-or-that in a house, they don't mean they "need" it to survive. They mean they need it to be able to enjoy the lifestyle they choose to have.
I truly don't get why anyone thinks they have a right to judge someone else for wanting to maintain a lifestyle that they enjoy.
For instance, I love to entertain, including both formal and casual dinners.....so I "need" a formal dining room and a large kitchen. I love having out-of-town family and friends come spend a few days, so I "need" several guest rooms and a coupld of extra bathrooms. My grandchildren love to come spend the night, and it's nice to have the extra rooms.
Other people might wonder why my husband and I choose to have a large home when only the two of us live here, but it's really not their place to worry about it.
Exactly. ITA.
It's not a "need", it's a "want".
In my case I insist on a 2 bathroom house (although a half bath is fine). When we lived in the midwest, DH rented a farmhouse with one bath (for the 4 of us). Never again! 
I'm the first to say that if you work for your money, you should spend it however you see fit. I have no problem with wealth, or people who live very high lifestyles if they earn it. What I have a problem with it what people claim to need. Ultimately we need food, water, and shelter for survival, and most after that is to make our lives easier.
I grew up in the 60's and 70's in a middle class neighborhood. Very Catholic centered (though we were not) large families. People were successfully raising between 7 and 12 kids with one bathroom, and maybe a second or half bath for a couple of the families. Kids shared rooms, the houses were older with large bedrooms, and sometimes 4 kids shared one room, but at least two to a room. I was the only girl in my neighborhood to have my own room. There were no man caves, no elaborate back yards, never more than a two car garage, because not many people owned more than two cars, and early on even that was rare. There were very few family rooms, and they were just fixed over basements, no open concept kitchen areas, but the food was just as good. All those kids grew up, many of us went to college, got jobs and lived just fine then as well as now.
It seems today, people (and not all of them that young) think they "need" so much. "We need a four bedroom house", "we need at least three bathrooms", "we need at least a three car garage" and on and on.
Then when you get to the creature comforts, like TV in every room, central air, a kitchen that costs more than I paid for my first house with all the latest appliances, first floor laundry rooms that are the size of a small efficiency apartment, it drives me nuts. They act like they won't survive if they don't get it. Many think they are entitled to it. There seems to be no more "starter" home mentality.
I've come to the age where I believe that the more you have, the more work (and time and money and stress) it takes to have it and keep it up. I like nice things and homes as well as the next person, but when it comes right down to it, Americans are just spoiled in the way we live, what we expect, and what we think is "necessary".
OP, you're obviously VERY worked up about this ..... and sorry, but I don't think that having 7 to 12 kids and one bathroom is what anyone should consider "the good old days". We also lived in a society back then when kids could go outside and play all day long and BE SAFE IN THEIR NEIGHBORHOODS. How often did you see child predators and abducted children being an every day concern? Almost never. Personal safety .... That kind of innocence ended a long time ago, so homes are now more inclusive, and the home construction industry responded accordingly.
Even with "home theaters" which you're looking down your nose at .... if I had a bunch of small kids, I'd rather have them watching movies under MY roof than constantly going to the movies with them. Why not put that money into the mortgage than the mall movie theater? What's odd about that?
We've long ago left the economy where most couples can get by on one income .... and if both people are going to be working 40 hours a week -- or thereabouts -- they certainly should be able to enjoy their downtime at home. New construction doesn't hurt the economy, for that matter, either. 
The average single home in my state goes for over $300,000.00. That a three bedroom starter home. The American dream is to own a single home and the the one acre land it's built on. They want privacy. They want protection against noisy neighbors and crime. They want a rural environment. They don't want to live in city or even a large town. They want clean air and clean water. They want their kids to see nature everyday, and not to see/hear buses and trucks everyday.
That's how much they want a house paid for by worthless paper money that increases everyday. The actual wealth is that land and house. The lucky few that are able to get it, are very lucky indeed. The rest have to settle for urban squalor.
Don't tell that to all the people who pay big bucks to live in NYC!
I live in a city, Buffalo NY, by choice.
I live 2 miles - about 3 minutes drive, from the downtown business district. We live near a park designed by America's most famous landscape designer, Frederick Law Olmstead. I'm also 3 miles or so away from Lake Erie and it's marinas. There are plenty of housing options in my neighborhood too. I live near a large 5 story NYC style apartment building. Many medical students and professionals rent there for it's proximity to their work. Houses and condos on my block have been selling recently for anywhere from $250,000 (small condos) to 2 million (large 6,000 SQ.+ homes).
This is dinky Buffalo - not Brooklyn or Manhattan or somewhere trendy to live!
There has been a revival all over American in urban living. People like the culture, the entertainment options, the excitement & diversity of city living.
Urban living isn't for everyone, anymore than suburban or country living suits everyone either.
Terrier, I'm a former Buffalonian! I went to school in Orchard Park, and moved to Los Angeles after The Blizzard of 77 .... the week Roots was on.
My sisters still live there ... in Hamburg, and my sister works downtown. It's a great city to raise kids in.
I don't see the OP as ranting or being worked up at all. That's not how I took her post. It's an observation/opinion. I think she stated it well.
OH ..... one more interesting tidbit I saw on PBS ....
Does anyone know what the biggest influence to change the banking industry was in the 1960's? ...... THE BIRTH CONTROL PILL !! 
Back when my parents married, right after WWII, the norm was that couples got married and immediately bought a little starter house, because the following year the first baby would be arriving. Birth control wasn't a reliable option and women just cranked out tots year after year after year ... ad infinitum.
When the birth control pill became readily available in the 1960's, couples could marry and postpone needing to buy a house for years, if they chose ..... no urgency to have a home with a yard for the ever-growing family. They could afford a "better" house right out of the gate. The world changed. 
For that matter ...... It wasn't that long ago that people only used their phones for making calls and checking voice mails ..... enough said.
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