BluefoxToday blog : The Recession May Compel More Homeowners To Downsize

The Recession May Compel More Homeowners To Downsize

It now appears that the recession may compel more homeowners to downsize. With a growing number having difficulty paying for and maintaining their McMansions, some are looking for smaller more energy efficient homes in an attempt to reduce both their monthly housing expenses and the physical effort required in taking care of larger homes.

 

houseRecent studies seem to indicate that both young and old are willing to give up the prestige associated with large, expensive homes in order to gain financial security and personal time. In just the past two years the median home size has decreased by almost 10%. With home sizes having grown by about 50% since the 1970s, many consumers now realize that they really don’t need the extra space; but what they are demanding is a more efficient use of the space they purchase.

 

And while the increase in first-time buyers and the scarcity of move-ups has skewed the house size numbers, the reality is that the change is likely to remain. Rising interest rates and tightened lending rules will force many buyers to spend less; and the continued concern about rising energy and maintenance costs will result in the production of homes with fewer rooms, less wasted space, more dual function areas, and the elimination of rarely used “formal” areas. Buyers will demand efficiency and practicality, but will also expect imaginative use of space that emphasizes both style and comfort.

 

Click HERE to view several appealing and efficient home plans and more news on downsizing.  The plan shown includes 3 spacious bedrooms in less than 1900 sq. ft.

 

The Housing Guru: The one source for all your housing questions

Comment balloon 15 commentsJohn Mulkey • January 22 2010 02:31PM

Comments

It's sad but many who would downsize and even retire to sunny Florida can't. 

That dastardly negative equity prison.

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) almost 9 years ago

Lenn - Count me in the group that is currently not selling--not underwater, but unwilling to sell at today's prices.

Posted by John Mulkey, Housing Guru (TheHousingGuru.com) almost 9 years ago

John,

There are a lot of homeowners that aren't underwater, but close with less that 5% equity.

Posted by Terry Chenier (Homelife Glenayre Realty) almost 9 years ago

Terry - Almost all of those who have 10% equity are effectively out of the market, for, after deducting the RE commission, they'll walk away from closing lacking sufficient cash for a down payment and closing costs on another home.

Posted by John Mulkey, Housing Guru (TheHousingGuru.com) almost 9 years ago

John,

Efficiency and practicality are the words that home buyers should embrace when purchasing a home. Now the housing market forces are forcing them to do just that. Good trend.

Posted by Esko Kiuru almost 9 years ago

Esko - I agree that the move is ultimately a return to a bit of common sense in housing.

 

Posted by John Mulkey, Housing Guru (TheHousingGuru.com) almost 9 years ago

One thing you just don't see much of around here is one bedroom homes 500 sq. ft. and under. There were a fair amount built up until about 1940 but they seemed to fall out of style. I think there's a market for this type of home.

Posted by Matt Grohe, Serving the metro since 2003 (RE/MAX Concepts) almost 9 years ago

I read an MSNBC article about sellers buying something, while they're credit is still good... then bailing on the high-end/financial drain property.  The family they used in their example saved 70% off their mortgage payments.  I don't recommend 'strategic defaults' but they happen.

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) almost 9 years ago

Matt - While 500 sq. ft. is pretty extreme, there are a few being built. The more logical and marketable choice would probably be at least 1,100 sq. ft. with at least two bedrooms.  On my website I have two plans under 1,200 sq. ft. with three bedrooms.

Carla - We'll probably see a lot more "strategic defaults" as home owners realize they won't recoup their losses for a decade or more.

Posted by John Mulkey, Housing Guru (TheHousingGuru.com) almost 9 years ago

Hi, John. Less IS more! I'm finding many buyers opting out of the "guest room," feeling that they would prefer a smaller home, with visitors staying in a nearby bed and breakfast!

Posted by Leslie Helm, Real Estate For Trail Riders (Tennessee Recreational Properties) almost 9 years ago

Leslie - I do believe that housing and lifestyles in general are in process of making some significant and long-term changes.

Posted by John Mulkey, Housing Guru (TheHousingGuru.com) almost 9 years ago

John I believe many are wishing they could sell larger homes for a small house, therefore smaller homes are a commodity ! Have a great week.

Posted by Lynn911.com ~ Dallas Real Estate Agent Top Team (Dallas Houses for Rent Dallas Apartment Rentals Lynn911.com ) almost 9 years ago

Lynn - That's a big problem for those currently wishing to downsize. The equity they expected to use as a down payment has evaporated.

Posted by John Mulkey, Housing Guru (TheHousingGuru.com) almost 9 years ago

John,

It is unfortunate, but definitely a sign of the times!  If too many start downsizing, we may see an over abundance of mansions vacant on the market and no buyers willing to purchase them.

Posted by Michelle Pimentel, ASP, IAHSP Empire Home Staging (Empire Home Staging Solutions) almost 9 years ago

Michelle - That may in fact be the new reality, and with many sellers lacking the equity to re-purchase, move-up sales will probably be sluggish for some time.

Posted by John Mulkey, Housing Guru (TheHousingGuru.com) almost 9 years ago

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