It comes as now surprise. The trend has been talked about in the industry for months and the last time it came up again was at the International Builders' Show held recently here in Las Vegas. But there has been no hard evidence to support that, until now. U.S. Census Bureau has compiled a load of numbers on this and they show that the median size of new homes started in the third quarter of 2008 was 2,090 square feet while in the second quarter the corresponding size was 2,291. In one quarter, then, the product shrank about 200 square feet which can be considered a substantial shift.
The sliding economy has a lot to do with it, of course. A large segment of the buying public simply can't afford to go for the bigger ones any more, the ones that so many got used to purchasing just a few years ago. By one measure they could start maybe at 2,500 square feet, with the backstop being a small mansion. Homeowners were able to buy them with the equity that had built up in the old home, for one, and also because the banking industry had become extra generous about doling out mortgage loans. If you could spell your name correctly you were good to go.
That was then. Today's real estate scene is practically a complete reversal from what it was a couple of years ago in many areas. In order for home builders to move their inventory now they have to bring the median price down quite a bit and that generally means the size of the home has to decrease. They often offer fewer extras as well. Nice tile floors, gone. Huge master suites, gone.
The current economic hardship may also be teaching the consumer a useful lesson. Bigger isn't necessarily better. Does a family of four really a need a five-bedroom house? Or a large game room? What about a three-car garage? With some astute planning a smaller home can easily meet the needs of a four-member family. A survey run by Better Homes and Gardens points in that direction, that people are becoming more practical about how they like to live and the extra space is usually the first thing to go.
Home builders are certainly taking notes and have begun adjusting their building plans accordingly.