Source: Alessandra Malito via marketwatch.com
The number of compact townhouses being constructed rose by 13% last year
The American Dream of owning your own home remains. But the home itself appears to have gotten smaller.
As American homes grow larger in size (and higher in price) many people say if they decided to move, they’d want to downsize. More homeowners would rather have a smaller house than a larger one (37% compared to 23%), according to research from real estate site Trulia.Here’s how it breaks down: Some 60% of people living in large homes of 2,000 square feet and over said they’d rather pick a smaller one next time around; 69% of people in the smallest of homes under 800 square feet said they’d like to supersize their accommodations.
Older Americans, more of whom are homeowners, are obviously more likely to want to downsize than millennials. The same percentage of baby boomers (37%) said they plan to move at some point in their life, and 42% of that number said they would prefer to live in a smaller home, according to a separate study released last December by the Demand Institute, operated by the research groups, The Conference Board and Nielsen.
But there are bigger forces at play too. “Those living in the biggest of homes know what the downsides are of living in those homes,” said Ralph McLaughlin, chief economist at Trulia. The expenses are large — utilities, taxes, maintenance and furnishing — in those homes and there’s greater potential for something to go wrong and need repairs. In theory, anyway. Older homes are more likely to have problems regardless of the size, like this California couple who moved to a 1929 home that was sinking and had rotten foundations.
Small homes are gaining in popularity, and are showcased in television programs like HGTV’s “Tiny House Hunters,” which pairs people with homes of about 600 square feet. Small homescan also offer homeowners big and fast returns, likely due to increased demand and proximity to city centers. Tiny homes can also be the right move for retirees, too, what with the lower costs in building and maintaining.
And the number of townhouses being built — often closer to public transport, smaller and less expensive than detached homes — also increased by nearly 13% last year to 97,000, according to a National Association of Home Builders analysis of Census Bureau housing starts and completions data released last week.
What’s more, people are getting less bang for their buck. In the fourth quarter of 2016, 29% of U.S. county housing markets were less affordable than their historic affordability averages, up from 24% of markets in the third quarter and 13% of markets a year ago, according to recent data published by the housing-research firm ATTOM Data Solutions, the parent company of real-estate website RealtyTrac.
But not everyone likes the idea of downsizing. Income plays a part in the size of a home someone wants — for people making under $150,000, the desire is to upsize (65%), while more than half (53%) of those with a household income of more than $150,000 would rather move into a smaller home, Trulia found. And those who lived in the smallest of homes surveyed (under 800 square feet) said they’d like to upsize too.
Almost half of millennials (46%), on the other hand, want to upgrade — even if they were already living in 2,000-square-foot homes. This is evident even among first-time homebuyers, who are choosing to skip the starter homer and opt for a big house in the suburbs.
Still, homes have been growing in size over the past four decades and the average size of a new home these days tops 2,700 square feet, about 1,000 square feet larger than in 1973, according to Washington, D.C.-based think tank American Enterprise Institute for Public Policy Research. People interested in moving and finding the right size should tap their social networks to see what works for them and consider what they’ll want in the next three, five or 10 years. “Getting it right the first time will save you a lot of money in the long run,” McLaughlin said.