BluefoxToday blog : Home builders are downsizing their product

Home builders are downsizing their product

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.




Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst - syndicated mortgage, housing and property management blog
My cell: 702-499-1006

Comment balloon 10 commentsEsko Kiuru • January 25 2009 11:15PM


Ok, don't go messing with the garage.  I think 3 or 4 spaces is a good start.  That pesky lawn equipment takes up space, plus a project vehicle... that is 3 or 4 spaces right there, and the drivers are still sitting outside. 

;^ )

Posted by Lane Bailey, Realtor & Car Guy (Century 21 Results Realty) about 10 years ago

We saw this trend in our (lame and disappointing) parade of homes last season.  I, and I think most parade goes, love to look at LARGE and glamorous homes that are usually the showcase of the parade. 

In a belt tightening year, builders decided to participate in the parade, by building more "normal" average homes that were more likely to SELL.  While I understand their thinking, it was a very disappointing parade this past year...nothing special, average size and style homes....boring...

Yes, I know some of their models from past years may still be for sale...I know in my subdivision(a Parade subdivision in 2002), the last model home FINALLY sold about 18-24 months ago...Yes that is a long time to have a home on the market, BUT the builder makes the most use of that time showing off this Parade Model, and making more sales! 


Posted by Pat Tasker, Your Milwaukee Metro Area Agent (WI) (Shorewest Realtors) about 10 years ago
I have seen some beautifully done homes that are in the 2000 square foot range that amply provides for a family of four.  The key is to maximize the space.  Having a well planned home maximizing space also translates into a more energy efficient home too and lower energy bills!

Lori Cofer Pullman WA

Posted by Lori Churchill Cofer, Realtor - 509-330-0086 - Pullman, WA (Beasley Realty) about 10 years ago

Esko I am surprised that they are not even downsizing more than that.  2090 sq. ft house is still a very nice size house.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) about 10 years ago


Okay, okay, we'll give you an extra allowance for the lawn gadgetry.

Posted by Esko Kiuru about 10 years ago


It sure looks like the "normal" home is the wave of the future, at least on the short term.

Posted by Esko Kiuru about 10 years ago


That's right. A well-designed 2,000 sq. ft. home can be a dream product.

Posted by Esko Kiuru about 10 years ago


They probably will if this recession drags on. That's what the market calls for in that case.

Posted by Esko Kiuru about 10 years ago

It isn't the lawn junk I want extra room for..  Look at my newest blog entry and you'll see a garage that is about 1500sf.  I like that... it was one of the two there. 

Posted by Lane Bailey, Realtor & Car Guy (Century 21 Results Realty) about 10 years ago


That is a nice piece and an asset for any garage.

Posted by Esko Kiuru about 10 years ago