The typical size of a home sold in the United States is 7 percent smaller according to the US Census Bureau. With a shrinking economy, tougher financing, higher energy costs, and the demographics of home buyers changing that all makes sense. But the important question to builders and home owners alike is, will it last?
My guess is that it will depend on the cost of energy. The rest of the cost of housing will remain pretty constant and housing prices have come down to the affordable range in most parts of the country again. But the cost of energy is a huge variable. Why have a huge home that costs as twice to heat and cool if you do not use it efficiently. That is a cost that will carry on far into the future if it continues to go up.
“Home size gains flatten out or decline during recessions, and we’re in the midst of the most serious housing recession in decades,” said Kermit Baker, the chief economist for the American Institute of Architects.
It’s also hard to know whether the trend is a the result of a change in attitudes or a change in buyers, according to Kira McCarron, the chief marketing officer for Toll Brothers, an upscale homebuilder.
The recession could have led to a temporary turndown in the number of young families buying homes, for example. But when they return to the market, they may drive up McMansion sale again. Meanwhile, older buyers are dominating sales.
“The active adult product is taking a bigger share of the market right now,” said McCarron, leading to more small homes and dragging the average new home-size data down. via CNN Money.
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One of the most notable trends during the recent housing boom was the rapid increase in square footage of new homes. The increase was an important factor in the variance of average to median sale price growing from 6% to 22%. Square Footage Matters! See the AccuirZ website under Real Estate Reports to read more.
The problem is that people think that bigger is better, when honestly you can live in a much smaller home and still be happy. Heck, try spending the money on a smaller BETTER home instead of a more expensive McMansion that was thrown together on tiny lot in a giant housing track.
-Tyler
Excellent news from a sustainability point.
Contributing to this trend is demographics
The new homes may be smaller, but people expect much more in terms of luxuries and features. Vaulted ceilings, granite counter tops, etc.
Considering today’s gas and utility prices, its no wonder people are leery of larger homes!
Due to this mortgage and real estate slump and the struggling economy, too, the average home size had to shrink to reflect market conditions. Hopefully we learn from this that we really don't need all the extra space to live comfortably and productively. Cost of energy will play a role in the future direction of an average home size.
Quite true, I agree.
Very interesting article. It's hard to tell what exactly caused the reason for people buying smaller homes these days, but for whatever specific reason, the recession probably also played a major part. Perhaps, like you said, after this economic downturn the McMansion will become popular again like it was not that long ago. Have you considered creating a http://bit.ly/4bybHr poll for your readers? I find them pretty useful and also fun for voting!
Well, its really easy to predict as the factors are obvious, like affordability, economic conditions and unemployment, which are all making the situation worse.
Well its seems pretty logical why the Real Estate market is in hot waters. Recession, Un-employment, Slow revival of economy, you name it!
Lets hope for the best in 2011
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