Level of competition is heating up among millennial’s and baby boomers for smaller,more economical homes, but builders have actually been slow to satisfy demand. That could be showing signs of changing. Home sizes are starting to decrease, which might also assist in prices edge down, too.
Are builders gravitating to small sized homes?
“We’re starting to see [smaller] starter homes come back,” says Rick Palacios Jr., director of research at John Burns Real Estate Consulting.
The uptick started slightly in mid-2016 as employment and wages rose.
More buyers are “now in that life stage of their early 30s [where] they’ve got a good job now, they’re getting married, they’re having kids,” Palacios says.
Some builders are heading further away from cities, where land is less expensive. Or they are able to construct more homes on smaller lots or build a line of attached townhouses.
“A builder can’t pay through the nose for land and then build a starter home on that land,” Palacios says. “It just doesn’t pencil out for them. [We’ve] started to see more builders gaining confidence in building lower-priced, smaller homes.”
Nearly 29% of the homes built between 2010 and 2015 were 3,000 square feetor greater – hardly small by any standards. More builders concentrated on the high end of the market after the recession and built fewer smaller homes. Census data signifies that 14.72% of new homes in the 1990s were between 1,000 and 1,499 square feet. Between 2010 to 2015, that percentage shrunk to 9.75%.
Robert Dietz, chief economist at the National Association of Home Builders, projects about 850,000 new homes are going to be constructed this current year, despite the fact that market could really support about 1.2 million new homes.
An uptick in smaller homes is “not something that can be fixed overnight,” he notes. “It’s going to take a while.”
Here in Tampa we are experiencing a serious lack of inventory, so if a home is priced right when it hits the market, it usually will have multiple offers on it within a day or two. So if you have been thinking about selling your home, now may be the time to consider.
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Beds2 Beds
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