Downsizing: Is Small the New Big in Real Estate?

Big isn’t always beautiful. Small is the new flavor of the year for the American real estate market. Property buyers in the US are increasingly looking for smaller houses as they are easier to furnish and heat, partially due to energy costs.

In June 2009, a survey conducted by the American Institute of Architects indicated that 50% of architecture firms found that their clients chose homes with smaller square footage, compared to 13% in 2005. According to US Census data, the size of the average home fell to 2,200 square feet in 2008, the first decline in 13 years and is expected to fall even further in 2009. This trend has also been mirrored on Global Real Estate Search Engine Realestock, where listings have become heavily dominated by multi dwelling homes and condominiums.

The reversal from the McMansion trend illustrates the nervousness of Americans about the economy and the stability of their jobs as well as the restrictions lenders have imposed in the wake of the financial crisis.

Homebuilders are jumping into the mix too, with American companies such as KB, DR Horton and Meritage offering smaller starter homes to compete with foreclosures. In July, BusinessWeek featured an article on KB’s new Open Series which started at 964 feet. In Tucson, the base model sold for $ 89,999, downsizing on bathrooms and hallways, but gave buyers options to increase the size by 40%.

In July 2009, KB claimed that the program created a 59% jump in sales since the first of the year. The trend in downsizing has continued to rise in popularity in recent months.As potential home buyers continue to realize that prices don’t always go up, architects and homebuilders are responding to how families and new buyers spend time and use the space, rather than catering to the desire for flash.

Two storey foyers are giving way to more modest entryways, stairs are being trimmed in size and buyers are more conscious of putting minimal space to use efficiently.People are also staying single longer, but still have the desire to buy homes, creating an even bigger market for smaller homes. Santa Barbara-based B3 Architects are currently building a series of 800 square footers.

The most marketed-to-generation, the baby boomers, are getting in on the trend as well. With the kids away at college, baby boomers are increasingly in the market for compact one storey homes that are easy to maneuver in. KB is now offering twice the amount of single-storey layouts then it was a year ago.

According to Barry Berkus, president of B3 Architects, the housing that has been built no longer fits the needs of the growing market. Maybe that’s why, even with homes sitting unsold, we continue to build. As we continue to weather the recession there are now more and more green shoots of opportunity. For smart real estate investors, riding the trend towards smaller dwellings can be a potential financial gold mine.

Global Real Estate Search Engine Realestock. Lilian Sue writes for Realestock.com, the Global Real Estate Search Engine.

Article Source: http://www.eco-articles.com

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