The size of new homes in the U.S. increased about 20 square feet per year from 1973 (the first year the Census Bureau began tracking new home size). In 1973, the median size of a new single-family home in the U.S. was just over 1,500 square feet. The median size peaked in 2007 at 2,309 square feet, an increaseof 54%. The median size has declined almost 10% since then. Will the trend to smaller-sized homes persist?
Historically, the median size of new single-family homes declines during recessions. The median size of new homes declined 8.2% from 1978 to 1982. It declined slightly during the mild recession of 1990 - 1991. And it is has been declining since 2007.
Why? When the housing market declines, the percentage of first-time home buyers purchasing homes increases. First-time home buyers typically buy smaller homes and they don't have an existing home to sell. During economic downturns, homeowners who want to purchase new homes typically have less equity to roll over into the new home and are also more cost conscious so they buy smaller homes.
But historically, the decline in size reverses itself once the economy recovers. So the question is "Will the current decline in the median size of new homes reverse itself as in past economic recoveries or have we experienced a fundamental shift."
Before I share my thoughts, I would like to hear what you think.
Chuck Miller GMB CGP CGB MIRM CMP MCSP CSP
President / Builder - Chuck Miller Construction Inc.