Is it my imagination or my eyes…are newly constructed single family homes (SFH) becoming smaller? No, my eyes and imagination (on this front, anyway) are on point. Newly constructed SFHs are decreasing in size as confirmed by Q2, 2017 Census Quarterly Starts and Completions by Purpose and Design Report.
Currently, the median square footage for SFHs is 2,388; the mean or average square footage for SFHs is 2,616.
This elasticity in house size is consistent with historical patterns. Prior to and during recessions, SFH square footage falls as consumers tighten their budgets. Then, square footage increases as high-end buyers who have fewer financial constraints return to the housing market. This increased square footage, larger house trend was exacerbated during our current healing or post recession cycle because first time buyers stayed away from the market for longer “than normal.” Now that we’re seeing first time buyers coming into the market and their wanting smaller, decreased square footage SFHs, we can more assuredly say that this part of the pre-, during, post- recession cycle is over.
The National Association of Home Builders (NAHB) agrees. “As entry level market demand increase, the NAHB anticipates new home size to decrease.” Additionally, the NAHB anticipates that SFH size will continue to trend lower as “…builders add more entry level homes into the inventory.”
Contrasting multi-family units with single family units, the square footage size of multi-family units is anticipated to rise as more for-sale multi-family units come into the market. Multi-family apartment size was down during the pre-recession time period and that square footage didn’t change as did SFH square footage. Why? The for-sale market demand for multi-family units was weak due to the strength of the rental market pre-, during, and post-recession supply of multi-family units. Now that demand for for-sale multi-family unit is returning to historical norms, buyers want more square footage in those multi-family units.