America’s New Homes are Shrinking

metro-row_viennaTownhomes at Metro Row at Vienna Station in Fairfax County, VA
Photo credit: NV Homes

After a long period of continuous growth in the size of the average American home following the Great Recession, the average size decreased from 2,658 to 2,616 square feet between the 1st and 2nd quarters of 2016, according to the National Association of Home Builders (NAHB).  This is the first time home sizes have shrunk since the recession.

Demographic changes are a major culprit, as younger millennial buyers either prefer or can only afford smaller living spaces.  Younger buyers’ large student-debt loads, delayed marriage and childbearing, and the surge in the number of apartment units introduced to markets throughout the country have all contributed to more demand for smaller homes.  According to the NAHB, empty-nesting baby boomers are also downsizing for homes smaller than 1,900 square feet.  The luxury amenities and features of many of today’s apartment communities are further incentivizing potential buyers to delay home purchases.

eyawestsideContemporary townhomes at EYA’s 45-acre Westside at Shady Grove Metro mixed-use development in Montgomery County, MD range from 1,678 to 2,427 SF
Photo credit: EYA

In the urban core and inner suburbs, builders have been better able to capture buyers by building townhomes and condos that fit lower price points in return for the convenient location.  Census data show that national townhouse construction activity grew by 25% between the 1st and 2nd quarters, while housing starts for townhouses were at their highest levels since 2008, comprising 13% of all single-family starts.  In the outer suburbs, builders have been limited to building smaller homes, because today’s buyers face stricter lending standards as low mortgage interest rates have been offset by requirements for higher credit scores and larger down payments.

embreymillA selection of single-family housing products at Embrey Mill in Stafford County, VA
Photo credit: Newland Communities

In the Washington area, major builders have begun offering smaller homes and lot sizes.  National builder D.R. Horton recently introduced its Express product line with fewer floor plan choices and limited options to capture entry-level buyers in the far-out exurb of Warren County, VA.  Buyers can find a single-family detached house in the range of 2,500 to 3,000 square feet beginning at $320,000.  In the master-planned community of Embrey Mill in Stafford County, VA, which features several national builders including K. Hovnanian, Lennar, and Ryan Homes, developer Newland Communities recently petitioned the county board of supervisors to allow smaller minimum single-family lot sizes than originally approved, citing buyers’ shifting preferences.

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