Square Footage Matters! Home Sizes Scaled Down for Frugal First-Time Buyers

Taking note of the current economic downturn, some builders are modifying their plans to suit the budgets of the demanding first-time buyer market; Homes are being built smaller with fewer frills.

One of the most notable trends during the recent housing boom was the rapid increase in square footage of new homes. The increase was an important factor in the variance of average to median sale price growing from 6% to 22%, as stated in the Housing in Crisis Report.

"Since 1960 the median house size has increased from around 1,400 square feet to 1,769. During the recent construction boom, many areas of the country experienced development with homes exceeding 2,200 square feet, with additional improvements such as garages, central air conditioning and two or more bathrooms."

As the economy works towards recovery, borrowers - especially first-time buyers capitalizing off of the 8,000 tax credit incentive - are reluctant to spend more than what is necessary. Builders' statistics from this Bloomberg.com article show smaller homes involved in a large percentage of transactions and median prices declining due to a smaller average in size.

Square Footage Matters.