If you need assistance, please call 480-414-8902

Builders Are Building Smaller Homes

Friday, April 12, 2024   /   by Marvin Centura

Builders Are Building Smaller Homes

There’s no arguing it, affordability is still tight. And if you’re trying to buy a home, that may mean you need to look at smaller houses to find one that’s still in your budget. But there is a silver lining: builders are focused on building these smaller homes right now and they’re offering incentives. And that can help give you more options that fit the bill.


Newly Built Homes Are Trending Smaller


During the pandemic, homebuyers wanted (and could afford) larger homes – and builders delivered. They focused on homes that were bigger, so people had more space for things like working from home, having a home gym, bonus rooms for virtual school, and more.


But with the affordability challenges buyers are facing today, builders are increasingly shifting their attention to bringing smaller single-family homes to the market. The graph below uses data from the Census to show how this trend has evolved over the last few years:


a graph of a number of blue bars


So, why the shift to less square footage? It’s simple. Builders want to build what they know will sell. Basically, they focus on where the demand is strongest. And once mortgage rates started climbing and consumers felt the challenges of affordability creeping in, it became clear there was (and is) a very real need for smaller homes. As the National Association of Home Builders (NAHB) explains:



“After a brief increase during the post-covid building boom, home size is trending lower and will likely continue to do so as housing affordability remains constrained.”



A recent article in the Real Deal says this about how this helps buyers:



Even a slightly smaller home can be thousands of dollars cheaper — for both builders and buyers. . . In response to affordability challenges, major homebuilders are shifting priorities away from the big ticket homes and towards the cheaper set.”



What This Means for You


If you’re having a hard time finding something in your budget, it may help to look at smaller homes. And, if you consider new builds specifically, you may find a few other fringe benefits that can help on the affordability front – like price reductions or mortgage rate buy-downs. As NAHB says:



“More than one-third of builders cut home prices in 2023. NAHB expects builders to continue offering smaller homes and more affordable designs as housing affordability remains a barrier to homeownership.”



As Charlie Bilello, Chief Market Strategist, at Creative Planningexplains:



“Homebuilders are adapting to the lowest affordability on record by building smaller homes and offering more incentives/price cuts. The median square footage of a new single-family home in the US has moved down to its lowest level since 2010.”



If you explore these options, you’ll also get brand new everything, enjoy a house with fewer maintenance needs, and some of the latest features available. That’s worth looking into, right? 


Bottom Line


Builders building smaller homes can give you more affordable options at a time when you really need it. If you’re hoping to buy a home soon, partner with a local real estate agent to find out what’s available in your area.





 
My Home Group | Heidi Spielman Dream Homes Team
Heidi Spielman
8405 E Baseline Rd., Ste 105
Mesa, AZ 85209
480-414-8902

© 2024 Arizona Regional Multiple Listing Service, All rights reserved. The data relating to real estate for sale on this website comes in part from the Arizona Regional Multiple Listing Service. Real estate listings held by brokerage firms other than Heidi Spielman - Platinum Living - Dream Homes Team are marked with the Arizona Regional Multiple Listing Service logo and detailed information about them includes the name of the listing brokers. All information deemed reliable but not guaranteed and should be independently verified. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) nor Arizona Regional Multiple Listing Service shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. May 24, 2024
This site powered by CINC: www.cincpro.com