For the first time in more than 30 years the American home is shrinking. According to the National Association of Home Builders, the median home size grew continuously between 1973 and 2008, when it shrank 11%. NAHB also reports that 90% of homes built by its members in 2009 were smaller than those constructed in 2008, and 59% of builders surveyed in 2009 plan to build smaller homes in 2010.
In direct response to the new frugality imposed upon homebuyers by an economy that continues to frustrate, “value” is, once again, driving sales. The “smaller is better” momentum has been jump-started by downsizing Baby Boomers who no longer embrace conspicuous consumption. Austerity has become the new buzzword, and conservation the mantra of a generation that spawned the McMansion. But the Baby Boomer whose chicks have flown the coop has something in common with the up and coming next big generation, aka the Millennials. Those born between 1979 and 1993 have yet to start families, making their housing aspirations similar. The shear depth of this potential consumer group will continue to fuel the ensuing wave of “small is better” housing demand. As early as this year, the “Millennial” homebuyer could outnumber the Boomer, supplanting them as the group having the most impact on the housing industry in contemporary history. There will be five million more of them than there were Boomers when that generation first began swelling the housing market. That said, GenY’s comparatively moderate incomes will keep affordability on the front burner.
Production builders are rallying to the cry for affordability as competition from foreclosed properties has served to raise the bar on what constitutes affordable. The most efficacious way they have found to lower prices is to downsize. San Diego-based Newland Communities, Centex Homes and Lennar have all introduced smaller versions of some of their most popular floor plans resulting in the ability to lower prices and meet de
mand that continues to be fueled by the new frugality mentality. This strategy has worked well, particularly in light of the tax incentive program for first-time homebuyers. At Centex Homes’ RiverMist at Dutchman Village, single-family home sizes begin at approximately 1,400 square feet. At Lennar’s Colonial Heritage in historic Williamsburg, VA, single-family homes begin at 1,475 square feet and the largest is approximately 2,500 square feet. At Newland Communities’ FishHawk Ranch single-family home sizes start at approximately 1,300 square feet. While downsizing has resulted in lower prices, quality has not been neglected and many upgrades are now standard features making these little “jewel boxes” a win-win opportunity.
At CarolinaLiving.com, our editors are coaching buyers and sellers in the gamesmanship required to get thru the process successfully. As for going small: it’s really about smaller lots. Then we notice that “she” still gets most of what she always wanted, less the media room, third bathroom, etc. She gets her “small palace” which thanks to groups like Newland, will be a cozy, healthy green built home.