Some data released by the National Association of Home Builders will be of interest to home buyers and sellers. New-homes are, of course, new homes and as such it’s tempting to think “different” than the market for an existing home. Can we say “Maybe, maybe not?” Are new home buyers really THAT different than folks buying existing homes?
Perhaps the most interesting bit of data is that the average size of a house built is down for the first time in twenty-seven years! Maine readers may be particularly surprised to learn that the average home built in 2009 was 2,480 square feet—significantly larger than what we are used to in Maine. That’s down from the 2008 average of 2,520 square feet by about 1.6%. The pundits are saying things like “small is the new big.” (How much sense does that make really?) Of course the fact that we’re talking about something less than 2% makes me wonder about the margin for error… but there is also logic at work here. One commentator suggests that “cents and sensibility” are coming into play.
Cents and sensibility may mean talking about the cost per square foot. But we also need to remember we pay for our homes more than once. There’s the cost to build or buy it, the cost to heat, maintain, insure and clean it. Certainly as times get harder (a.k.a. the recession) the need to think about size and objective needs becomes important.
Let’s not be too quick to attribute the smaller home trend solely to the economy. Remember that the number of households with members 55 and older is increasing. Typically this is a “smaller home” market. This also tends to be a single story market. Does that suggest our general housing market is a bit more focused on single story homes? But wait! There’s also a focus on energy efficiency these days and two story homes are definitely more cost efficient to build…
Personally, I wouldn’t suggest one consider these market trends in planning purchases—they are too spongy and general. But the “cents and sensibility” factor is important. How much home you should buy is really a factor of your needs and your needs should include a reasonable determination of what you can afford—not only to buy but to heat, maintain, insure and clean. One thing we ought to have learned from the foreclosure crisis is that it’s not just about how much of a mortgage a buyer can get. The critical question is “how much house can a buyer afford?”