Decades of the “bigger is better” mindset of American prosperity had its effect on the housing market. In the 50s, the average size of a single family home was less than 1000 square feet. Fifty years later, as the housing boom flourished, the average single family home ballooned to more than twice that size. Some of the up-sizing in living came from social ideals of individualized living space (such as a room for each child), expanding and upgrading social areas like kitchens and living rooms, the rise of the game room, craft room, “man-cave,” home theater, and other expansions on personal indulgence (including luxe bathrooms), significant increases in home office space, and the overall increased prosperity that made these things financially possible.
Now that the Boom has busted, families are taking a new look at housing. Despite all of the underfunded “McMansions” and large homes now on the market, recent home sales are trending toward smaller living spaces. The National Association of Home Builders reports that new homes built in the past few years are also smaller than Boom sizes. While still far larger than the 50s average, Americans are rethinking what makes a home ideal, and size is mattering in a whole new way. Instead of marveling at the cathedral ceilings, super-sized rooms, and massive floor plans, homebuyers are considering just how and how much the space will be needed and used, and calculating all the ways that space will cost them well past the purchase price.
Despite the rock-bottom pricing of many large homes, small homes are cheaper still. Homebuyers are less focused on what they can get, and more focused on what they can keep: buyers (and the banks that finance them) aren’t interested in jumping to the top of their price range or risking too big of an investment. Even when the large home is easily affordable, buyers are counting the costs of living in large spaces, from energy costs to the effort and expense of maintenance and upkeep. Extra space is becoming less of a luxury and more of a bother: just more space to heat, cool, and clean without enough of a lifestyle benefit to justify it.
Size for its own sake just isn’t what it used to be. Burnt out on having things just to have them and on wasting money on non-essentials, buyers are now focusing on quality; think, it’s not the size of the kitchen that counts, but how you use it.” Filling large spaces with furniture costs money, but a smaller space can translate into fewer, better furniture pieces. Likewise, reduced living costs allow upgrades in items like appliances and in-home electronics, which themselves are increasingly designed with space and energy saving technology. Americans are discovering ways to live bigger in smaller homes, actually increasing their quality of life by decreasing square footage.
A lingering side-effect of the housing bust is the new preoccupation with resale values. Homebuyers, even those planning on settling down for the long-haul, are very concerned about the home’s future marketability. Though housing recovery is underway and buyers believe in value increases, they also know that housing could fall again someday, and they don’t want to be left holding the debt. Big, expensive houses are the first casualty of a housing decline: no one wants them when affordability hits the skids. The very fact that large houses are so very price-reduced now is giving some buyers all the reason they need to stay away: they don’t ever want to be in the current seller’s shoes. Small houses might not enjoy the large jumps in value that bigger ones might see in a high economy, but they don’t suffer the same extremes in devaluation either, and they’re always easier to sell.
Big, beautiful homes are still the stuff of many American dreams, but current homebuyers are more content to dream those dreams, and buy smaller realities.
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About David Goldstein — David Goldstein is an Owner and Founding Partner of Express Schools, LLC. which operates online education providers Real Estate Express, Insurance License Express and License Tutor. Follow him on Twitter.