Another factor in the equation is .... increased prosperity.
Where there was once but a single master bath, now homes often have several baths. As are the larger jacuzzi tubs. There are more appliances - like dishwashers - and they're larger. Finally, folks don't want to wait for that hot water to arrive.
So, the old way - having a single big tank of hot water - is looking inefficient. Having multiple heaters, located much closer to the user, starts looking attractive. Even though the new homes are simply massive - the last one I did was 14 times larger than my home - folks also like the compact size of these instant heaters.
Here's one way to look at things .... imagine taking an extension cord into a home, and using a generator set just outside a door. In my place, a 25 ft. cord would let you reach nearly everywhere. In these newer homes, a 100 ft. cord would be needed.
