Data suggesting new-home sizes increasing not consistent with long-term expectation
April 11th, 2012 by
What exactly is going on with new home sizes?
Recently, the prevailing assumption has been savvy buyers desire smaller, more energy efficient homes. The reality is the average size of new homes is increasing once again after shrinking during the recession.
Numbers from the U.S. Census Bureau tell the confusing story. From 2007 to 2010, the average size of a new, single-family home fell from 2,504 square feet to 2,381 square feet. It appeared Americans were becoming more practical about home sizes. That trend reversed between 2010 and 2011, when new homes grew to an average of 2,522 square feet.
Claire Easley of Builder Magazine recently discussed the conflicting perception and reality with Rose Quint, assistant vice president of survey research at the National Association of Home Builders. Quint intimated numbers may be misleading. Average new-home sizes are probably a greater indicator of tightened credit standards than consumer demand:
“The people who were able to buy a home last year had super good credit, super good savings, super good employment—otherwise you would not be able to get a loan. New single-family home starts were 75% lower [in 2011 compared to 2005], so it’s such a tiny market now that this small group of buyers’ preferences are dominating the market.”
Quint encourages builders to continue to think small(er):
“The moment first-time buyers are able to come back into the market, and both buyers and builders regain access to credit, we expect sizes to ease again.”
[Chart from Builder Online]