The Home Buyer's Korner

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November 28th, 2014

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Affordable Homes for Millennials

One of the newer trend in newly built, single-family homes is they are getting smaller, a sign that builders are addressing a long awaited shift to address millennial home buyers that are  more affordable, eco-friendly and don’t provided for wasted space like separate dining rooms, when they’re more inclined to having a home office.

New Home Sizes

Commerce Department just release showed that the median size of a single-family home built in the third quarter was 2,414 square feet, which is down 2.3 percent from the second quarter measurement of 2,472.

The third-quarter figure is the lowest since 2012’s fourth quarter and it is the second consecutive quarterly decline following a 0.2 percent drop in this year’s second quarter.

Median new-home sizes had been on an upward trajectory since 2012 as builders have been catering to upper income home buyers who hadn’t felt the full force of the recession by building increasingly larger, more expensive homes.

First time home buyers; during and immediately after the recession have largely sidelined buying a home due to stagnant wage growth, job insecurity, mounting student loan debt and stringent mortgage-qualification standards.

Early signs are showing that first time home buyers are returning to the housing market due largely in part to an improving economy and high rental cost. National home builder D.R. Horton Inc. last week posted a 38 percent gain in sales orders for its fiscal fourth quarter ended Sept. 30, fueled partly by hefty gains from its new Express brand of homes priced at less than $200,000.

The Commerce Department reported that construction starts for single-family homes increased by 4.2 percent from a year earlier to a seasonally adjusted annual rate of 696,000. The most likely source for that greater volume of starts is coming from first time home buyers.

The third-quarter decline in median new-home size doesn’t necessarily reflect changes in preferences, but more likely reflects who’s buying new single-family homes.”

The median new-home size now stands 3 percent below its recent high of 2,491 square feet in the third quarter of 2013. However, that footage is still 8 percent higher than the recent low of 2,236 square feet in the third quarter of 2011.

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