Why buyers struggle with small houses

Editor’s note: The United States needs more housing. It’s not a new problem, but new solutions are emerging – some old ones are getting another look. How are they shaping the future of housing? What shows the most promise?

This method exploring a few different ways and where they might come from.

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The price of almost everything has increased in recent years, and housing is no exception. High construction costs and high housing prices have kept many buyers on the sidelines, but some builders have found out, using small new buildings to make payments.

The cost of housing remains a concern for many Americans, but this “less is better” approach to building a new home may be one solution to the financial crisis.

The footprint has been shrinking

The median size of new single-family homes has fallen every year since 2015 — when it was 2,320 square feet — to 2,036 square feet in 2023, according to data from ResiClub and Parcl Labs shared Real Estate News. And according to a May report from the National Association of Home Builders, the median number of new single-family homes built in the first quarter of 2024 was 2,140 square feet — which the NAHB said was the lowest number since the second half of 2009. .

And home sizes will continue to shrink, John Burns Research & Consulting’s New Home Trends Institute predicted in a report. In a survey of residential production developers, 43% said they worked on a small project last year than the previous year, while only 15% reported working on a large project. In addition, 39% of respondents expect that the houses designed in 2024 will be smaller than those from the previous year.

Revisiting the original building of a century ago

Small houses are not all the same – some are basic and are designed to be affordable, while others boast high-quality design and new urban planning standards to achieve living and – mobility. In some ways, the small house of today is not different from the houses that were built after the war in the 1950s, or even the letter “tool house” of the beginning of the 20th century.

For many buyers, the detached family home continues to be attractive, explained Jenni Nichols, VP of Design for John Burns Research and Consulting.

“There’s something — maybe it goes back to Sears Roebuck cottages — about having your own house,” Nichols said. “I think there is a passion for people who are separated. People like it. People like to share walls. Even if the house is small, there is something special about having your own house – it’s a psychological connection that the classic sense of the American Dream.”

Some of the new developments have homes that are less than 1,000 square feet and skip amenities such as garages and condos to make the homes smaller and more affordable for buyers. . For example, Lennar’s Risinger Court homes in the Fort Worth area have single-story homes as small as 763 square feet and priced at $198,000. That’s below the $351,000 median list price for the Fort Worth metro and less than half of the $420,600 national median price for all new home sales in August.

“Your home today is like your first home. And I think we’re going to start seeing more of that,” Nichols said.

Homes and cities ‘make sense for people’

Other developments, such as the “Wee-Cottage” community in the Denver area and the multi-phase Indigo community in Richmond, Texas, take a more holistic approach, focusing not only on the building but also on the landscaping, interactive tools. walking in the air is awesome. Scott Snodgrass, founder of Meristem Communities and Indigo’s master planner, said they are meeting the market’s need for affordable and high-quality housing.

“A homebuilder’s business is to build homes and sell them, but we also need to make sure we’re building homes that make sense for people,” Snodgrass told Real Estate News. “The better job you do with that, the wider the pool of buyers that you can reach with those homes, then the more homes you’re able to sell and the faster you can sell.”

Snodgrass said that Indigo’s small “home” reflects the changing demographics among consumers in the Houston area (and the US in general). “Less than 20% of our families are two-parent families with children, but Houston developers are still building 70% or 80% of our homes for the home design,” Snodgrass said. In many cases, he added, small families “would be better off buying a small house.”

Small scale, big demand

It’s not just millennial couples or families who want smaller, more affordable homes — Snodgrass says older Gen Xers and freelancers are looking for homes that support style. their lives are busy and the desire for little care. And the smaller plans, which range from 949 to 1,400 square feet, make it easier for developers to “build them all at once,” Snodgrass explained.

Sixteen of those homes, the smallest of which started at $219,000, were completed — and sold — within a 45-day period, Snodgrass said. Another 60 will be built on the other side of the building.

The speed of sales shows the real demand for these small houses, he said, adding that “they have hundreds of people on the waiting list.”