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Square Footage Matters! Home Sizes Scaled Down for Frugal First-Time Buyers August 7, 2009

Posted by John Watch in News Feed.
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Taking note of the current economic downturn, some builders are modifying their plans to suit the budgets of the demanding first-time buyer market; Homes are being built smaller with fewer frills.

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%, as stated in the Housing in Crisis Report.

“Since 1960 the median house size has increased from around 1,400 square feet to 1,769. During the recent construction boom, many areas of the country experienced development with homes exceeding 2,200 square feet, with additional improvements such as garages, central air conditioning and two or more bathrooms.”

As the economy works towards recovery, borrowers – especially first-time buyers capitalizing off of the 8,000 tax credit incentive – are reluctant to spend more than what is necessary. Public records on property data, and builders’ statistics from this Bloomberg.com article show smaller homes involved in a large percentage of transactions and median prices declining due to a smaller average in size.

Square Footage Matters.

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1. Terri Treas - August 10, 2009

Do you think builder’s are responding or are these homes already on the market?

2. John Watch - August 10, 2009

This is hard to say, I believe many homes have been built or in the process of being built. Clearly moving foward, the trend will probably revert back to historical levels of around 1,800 square foot homes.

We simply changed our habits in the last 10 years, like all marketing one wonders did we change or did marketing get us to change.

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