Have you ever walked into an average home from 50, 75 or even 100 years ago? What was your first reaction? Was it that the rooms seem really small? Why are the closets tiny? Were the ceilings low?
There is a simple reason why your observations are true. Housing at that time for most people was a basic need and what you were able to purchase was purely based on what you could afford on little or no credit. Times have definitely changed, but it seems after years of incredible home starts and the age of McMasions, the concept that big is always better is rapidly becoming passé. This has become an undeniable fact in homebuilding. In recent years, people are downsizing and are gravitating towards buying and building smaller homes. This trend cuts across both economic and demographic boundaries. The reasons why seem to be quite logical and it is apparent that the old rules do not apply.
According to a February 18th 2015 report published by the National Association of Home Builders, the typical size of newly built single-family homes declined during 2014. In their report they attribute the decline in new home sizes to a post-recession economy and the influx of more first-time buyers returning to the market. This trend is predicted to continue.
According to fourth quarter 2014 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area decreased from 2,414 in the third quarter to 2,385 square feet at the end of 2014.
Boomers and Millennials are two groups on different sides of the spectrum but both have similar needs for homes with smaller square footages for very different reasons. Baby Boomers were born between 1946 and 1964. They total around 75 million and make up about 23% of the nation’s population. The last boomers will turn age 65 in the year of 2029. Boomers are getting older and retiring, and they no longer want or need the prestige of move-up homes. They don’t want the square footage, maintenance nor the cost. They are done with moving up, they want to simplify.
Depending on who you ask, Millennials are those born in the 80s and 90s and become adult age in the 2000’s. This generation has been maligned for having a lack of motivation and being overly dependent on their parents. To be fair, Millennials have been delayed in truly participating in the housing market by student loan debt, the great recession, down payment requirements and a number of other factors. Millennials are a force to be reckoned with by their sheer numbers, which exceed baby boomers. Those that have ventured into the housing market are not thinking big. They are thinking about what they can afford and are willing to wait for it. In a post on Housingwire.com, Nela Richardson, chief economist for Redfin states “While right now, Millennials are not buying homes, which are what most people get caught up in, the truth is, 92% of Millennials who don’t own a home say they plan to buy in the next four years”.
Millennials’ tastes are simple and more utilitarian, but at the same time they want what they want. They are big into convenience, location and low maintenance. They are fine with a home that has a smaller living area as long as they get their stainless steel appliances like they had at home.
Those people who are re-entering the housing market have a hangover so to speak. They have reassessed their choices and lifestyles. They have seen friends, neighbors and relatives go through painful job loss, foreclosure and bankruptcy, and they have learned from others mistakes. The ideal is no longer about gaining more career success in order to be able to afford the impressive bigger house and the sleek sports car. People’s priorities have changed from a “bigger is better to a less is more” mentality, and that has been reflected in their housing choices.
Energy Efficiency/Green Building
Energy efficiency and green building are not going away in the housing market. Millennials definitely embraced the concept and want to reduce their environmental impact and carbon footprint. This is also becoming truer of the greater population albeit for different reasons. I have a friend who just put solar panels on his house. He calls himself “Accidentally Green”. He states “I did not make this decision because of environmental reasons. I did it to reduce energy consumption in order to save money.”
Regardless, people’s motivations and attitudes have changed and by proxy so have their preferences in the type and size home they purchase. People are looking towards homes with smaller square footages in order to cut down on their heating and cooling needs. They are looking at more eco-friendly building techniques and products to reduce the amount of waste and material and energy consumption.
Land Availability and Cost
One thing for sure is that they are not making more land. The Great Recession resulted in a lot of things, but did not produce cheaper land. In this down period land developers sat on land instead of developing because they did not want to develop subdivisions with empty lots, no customers and big debt. The lack of buildable land is especially true in more densely populated areas as in the Northeast US. Available lots are few and far between and tend to be much smaller in size which translates into homes with much smaller footprints.
Not Sacrificing Amenities or “Must Haves”
Economics, lifestyle changes and energy efficiency aren’t the only reasons why people are choosing smaller homes. People have gradually realized that high end comfort can be achieved though the efficiency of the usage of space.
Professional designers have embraced this idea, and as a result, there have been many books written about small spaces. A grass root movement has been created towards small housing and how utilitarian simplicity and comfort can provide a great living experience.
We welcome hearing your thoughts and questions about the current trend of downsizing. Feel free to post your questions and ideas in the comments section below.