Considering the major economic downturn of the last few years and the “getting by with less” mentality that many consumers have adopted, logic dictates that most home shoppers today would seek out smaller domiciles than the McMansions that of yesteryear, before the housing bubble burst. However, the average size of new single family residences has increased 13 percent on a one-year moving average basis between the first quarter of 2010 and the first quarter of 2015, according to recent data from the U.S. Census Bureau’s Census Quarterly Starts and Completions by Purpose and Design and an analysis from National Association of Home Builders. What’s more, average square footage for new single-family homes rose from 2,677 to 2,736 square feet in the first three months of 2015.
These stats run parallel to the findings of a recent Trulia survey that revealed that 43 percent of adults desire a somewhat or much bigger home than their current abode, including more than 60 percent of millennials and more than a quarter of baby boomers.
Ralph McLaughlin, a housing economist for Trulia in San Francisco, says he was surprised by two key findings from the survey.
“First, more millennials said they wanted to live in a larger home. This is somewhat surprising, especially with all the media attention that the trend in tiny homes has received,” McLaughlin says. “Second, we found that baby boomers were split between wanting larger homes and smaller ones. Again, this is also unexpected because there’s been speculation that a wave of retiring boomers want to downsize (to smaller homes).”
However, given the recent economic recovery — which includes both decreasing unemployment and slightly increasing incomes — it’s not exactly a shock that many Americans desire a larger home.
“As people get better-paying jobs, housing is one the many aspects of their lives they look to upgrade,” McLaughlin says. “The desire to have a larger home is natural for most people, and it’s been part of the American Dream for decades.”
Robert D. Dietz, an economics and housing policy analyst for the NAHB, says the recent growth in new-home size also is reflection of the change in buyer composition — with a greater contingent of wealthier and older buyers who are already homeowners — that builders are seeing.
“These move-up buyers have made up a greater share of the market in the years after the Great Recession, and the result has been growth in median new home size,” Dietz says.
Other factors driving the trend toward larger homes include continued relatively low mortgage interest rates; the desire to have ample space to accommodate boomerang children and aging parents who might move in, in addition to visitors; and postponed retirement, resulting in a delay in the longing to downsize. While angling toward a larger home is unrealistic for those who can’t afford it, “for many others it makes sense, especially those considering having multiple generations living together,” says Bill Golden, Realtor with RE/MAX Metro Atlanta Cityside.
To correctly size your next home, it’s important to consider many criteria besides size alone, say the experts. These can include characteristics like school quality, location, proximity to amenities, and price.
While it may be tempting to buy the biggest home that your budget allows right now, doing so can potentially bring financial stress down the road. This is because a pricey home involves a more expensive mortgage, which can be difficult to pay if you experience even a small drop in income; additionally, a larger residence typically comes with higher maintenance and renovation costs. “As such, we recommend that homebuyers be conservative when it comes to estimating the size of the home they can afford,” says McLaughlin.
Allison Goodhart, co-lead agent of The Goodhart Group with McEnearney Associates in Alexandria, Va., says home seekers should always think several years down the road and not just buy something that fits their needs in that particular moment.
“It is better to buy a property that you will be able to stay in if there is a chance you might have another child … or have a parent or adult child who might move in with you,” says Goodhart.
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