Finance Globe

U.S. financial and economic topics from several finance writers.
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NAHB: Americans Are Buying Smaller Homes

Homebuyers are choosing smaller homes than they had been in the previous year, according to a report released on Monday by the National Association of Home Builders (NAHB).

The NAHB analyzed data recently released by the U.S. Census Bureau to find that the nationwide average for new single-family homes dropped to 2,438 square feet in 2009.

This comes after a long pattern of homes getting bigger and bigger - the size of homes increased has increased continually since the 1980's and peaked at 2,571 in 2007. The average home size remained flat in 2008 and then dropped in 2009 - almost 100 square feet smaller than they were just two years before.

Along with less square footage, buyers of new homes are making do with fewer bedrooms and bathrooms. The percentage of homes built that had four or more bedrooms increased for almost 20 years until hitting its peak of 39% in 2005 - it was 34% in 2009. Three-bedroom homes accounted for 49% in 2005 and grew to 53% over the next four years.

And two bathrooms seems to be the magic number for many buyers - the proportion of homes with two bathrooms increased from 35% to 37% in 2009. Homes with three or more bathrooms accounted for 24% last year after declining from a peak 28% in both 2007 and 2008. Two-and-a-half bath homes have remained at 31% for three years straight, and homes with one or one-and-a-half baths have accounted for less than 10% of all homes built for more than a decade.

When the Census Bureau first started collecting information about new single-family homes back in 1973, 67% of homes had only one story, 23% had two or more stories, and 10% were split levels.

Over the next three decades, the proportion of single story homes steadily declined until reaching its low of 43% in both 2006 and 2007 - while the proportion of two or more story homes reached a peak of 57% in 2006.

Since 2006, the proportion of single story versus two or more story has reversed, with one story homes increasing to 47% and two or more story homes dropping to 53% last year.

“We also saw a decline in the size of new homes when the economy lapsed into recession in the early 1980s,” said NAHB Chief Economist David Crowe. “The decline of the early 1980s turned out to be temporary, but this time the decline is related to phenomena such as an increased share of first-time home buyers, a desire to keep energy costs down, smaller amounts of equity in existing homes to roll into the next home, tighter credit standards and less focus on the investment component of buying a home. Many of these tendencies are likely to persist and continue affecting the new home market for an extended period.”

So, even if it's due to the recent economic downturn, the average home buyer is getting away from the "bigger is better" mentality. A smaller home means smaller bills, less maintenance and cleaning, completely furnishing the home with fewer purchases, less time working to keep up with the Joneses and more time for the important things in life, and no more hauling the vacuum cleaner up and down flights of stairs. Not a bad thing in this author's opinion.

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Sunday, 05 February 2023

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