Are Homes Getting Smaller?

The housing market is going through changes. There’s a growing shortage of affordable homes—rising millennials are becoming first-time home buyers. The overall size of homes is changing, and new home builders are responding to this change by building smaller homes. These new home buyers are different from their parents and tend to prefer smaller homes close to amenities. This trend will likely continue into 2023. However, several factors could contribute to the overall change in home sales.

Millennials

According to a recent study, Millennials are increasingly buying smaller homes. They have smaller families than previous generations, so they don’t necessarily need larger homes. Additionally, these buyers are more environmentally conscious and don’t want to add unnecessary square footage. Furthermore, they may also be more interested in walking and biking to work and school, making smaller homes ideal for their lifestyles. This trend may also be attributed to affordability.

Buying a smaller home can have many benefits, including reduced costs, time for travel, and a lower carbon footprint. It can also free up funds for travel, student loans, and other goals. Additionally, packing and moving a smaller home is more accessible, and homeowners can sell a smaller house much faster than their larger counterparts. Millennials also enjoy living in a community where they can meet others and exchange ideas.

Millennials are also increasingly concerned about the environment. They have grown up with water bottle filling stations in schools, ecology classes in college, and Solar Decathlon competitions, so they’re concerned about the future of our planet. Because of these concerns, they are now more inclined to buy a small, energy-efficient home than a larger, expensive one. Millennials are also leaving the cities for more affordable neighborhoods, where they can live without worrying about the planet’s future.

Homeownership has been the traditional path to wealth, and many millennials have been denied that opportunity. The housing market crash of 2008 left millennials with lower homeownership rates than their boomer counterparts. Despite these factors, millennials are twice as likely as baby boomers to view homeownership as a good investment. Millennials cite investment as one of the top reasons for buying a home, compared to the boomers.

While many millennials are reluctant to buy a larger home, they are willing to make rash decisions to afford it. They are willing to buy a home sight unseen, buy a fixer-upper that needs major renovations, and offer above the asking price to get a cheaper property. The housing market in the United States is expected to grow at a record pace in 2021, with historically low-interest rates helping to create a housing boom.

In addition to the housing market, millennials are looking for “instant gratification.” With the onset of social media, these young buyers are not willing to take on a lengthy renovation project. They prefer to move into their new home and start living there immediately. Therefore, the price gap between larger and smaller homes is much broader than in previous generations. These buyers also tend to place a high value on energy efficiency, meaning that smaller homes require less energy than larger ones. This may still leave the nagging question are homes getting smaller? let’s look at some other reasons why this may be happening.

Environmental factors

The size of homes may be decreasing, but the carbon footprint is increasing. In 1950, the average new single-family home doubled in size, resulting in more space used per person which resulted in bigger carbon footprints.

larger houses are more expensive to construct and operate, and the environment takes a hit too. This contributed to the trend toward smaller homes along with climate change and other factors, such as the need for more space in urban areas.

Financing

In recent years, new homes have become smaller and more practical, and there is a growing trend toward tiny homes. New homes are no longer the massive McMansions of the past, and builders are reducing the size of their homes to remain competitive. Moreover, the average size of a new home sold last year was just 8,428 square feet, a record low in 39 years. This trend is likely to continue. So are homes getting smaller? Yes, times are indeed changing and will continue to change as we learn and grow.