Builders to Market Smaller Homes

Sales of new homes continue to be weak so builders are turning to different strategies to increase sales. One popular new trend has been to construct smaller homes. This change is occurring as the era of the mega-​mansion wanes.

According to a Wall Street Journal report by Dawn Wotapka, the average home in 2007  had 2,521 square feet. This year, new homes are coming on the market with an average of 2,438 square feet.  Along with the smaller footprints, new homes include other features:

  • One floor: Wotapka notes that 47% of single family home sales last year had only 1 story. In 2007, this housing format had 43% of the market.
  • Fewer bedrooms: McMansions often sported 4 or more bedrooms. Over 50% of homes sold last year had only 3 bedrooms. In comparison, only 1/​3 of homes sold last year had 4+ bedrooms.
  • Fewer bathrooms: During the new home boom in 2007–2008, the percentage of homes sold with 3+ bathrooms reached 28%. Last year, only 24% of homes sold had 3+ bathrooms.

Do these numbers indicate a long-​term shift in the housing market? After all, the median age of the U.S. consumer is creeping up and older home buyers often look to trade down. In addition, consumers are increasingly aware that larger homes are expensive, require more maintenance and are anything but green when it comes to energy use.

The chief economist for NAHB, David Crowe admits that the 1980’s recession was accompanied by a swing to smaller houses. But that decline ‘turned out to be temporary.’ Crowe expects that stricter financial controls and less consumer enthusiasm for housing as an investment may keep a lid on demand for huge houses.

To keep inventory moving, builders will likely continue to promote smaller homes along with features such as energy efficiency and lower-​maintenance for the foreseeable future.

[Source: Wotapka, Dawn. New Homes Getting Smaller…Smaller. Wall Street Journal. 14 Jun. 2010. Web. 25 Jun. 2010] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.