With the declining housing market, home builders across the country are faced with a problem. The homes they have been building are no longer selling. Buyers’ tastes in homes have changed and home builders have to adjust their plans to meet the new needs of the consumer. 

 

First, builders have to reduce their current inventory of homes they have already built. This usually means price cuts. New developments are often seeing a base price decline between phases. Many people who purchased homes in the first phase of a development are now seeing their exact same model selling for thousands less in later phases.

 

After the builders have reduced their inventory, they are focusing on building smaller homes. With tougher financing requirements, buyers are looking for smaller, lower priced homes. 

 

According to Kelly Evans of the Wall Street Journal, “over the past three decades, prosperity and a demand for space to accommodate home theaters, offices, gyms, and palatial kitchens has pushed up the average size of newly constructed single-family homes by nearly 45 percent even as the size of the average family has declined.” The US Census Bureau reported that the median square footage of a single-family home in 2007 was 2,248, up from 1974’s median of 1,560.

The Baby Boomer generation are increasingly becoming empty nesters, and despite the amount of wealth they hold, they are trending towards smaller homes. The reasons? They no longer need the space that a family requires and, with rising energy costs, the monthly expense of a large home is not worth all the extra space. A move towards smaller homes in existing neighborhoods has been seen by many who study housing trends.

 

Although an empty nest is often the catalyst for downsizing, the US Census Bureau has data showing the number of households without children is steadily climbing and estimates that they will account for nearly three quarters of all US homes by 2025. 

 

Despite the trends the National Association of Home Builders expects the average size of newly constructed single-family homes to level off around it’s current figure, about 2,500 square feet. Although 2,500 square feet is certainly not a “McMansion,” it is larger than the median home size in 2007 of 2,248 square feet. 

 

Kira McCarron, the chief marketing officer of Toll Brothers Inc, a US home builder, says “it’s not that people don’t want or can’t afford (big houses). It’s that they’re afraid of them now - it’s a confidence issue more than an affordability issue.”

 

No matter what the reason, you can’t deny the trends are veering away from the colossal McMansions that have been popping up across the country. Buyers are looking for smaller more affordable housing.