Americans everywhere are tightening their belts, but still our houses are getting bigger. Why?
Considering the realities of today’s housing market – that the empty nester population is growing and environmental sustainability is more and more dictating the direction of development – it would be easy to assume that America has been sizing down its houses. Wrong.
According to the most recent Census data, the median square footage of the typical single-family house is 2,384; for reference, that’s about the size of a tennis court. In 1970, the median square footage was only 1,525, and in the last ten years alone, the median square footage has increased approximately 250 square feet.
Houses are being built bigger every day, and here are four reasons to help explain why:
1. Financing is Still a Challenge, Just Not for the Wealthy – Lending standards have certainly loosened over the last year, but strict requirements from mortgage companies are still keeping a large number of buyers with low credit scores out of the market. Coupled with the fact that traditionally less-wealthy first-time homebuyers tend to aim for smaller and used homes, new homes are more often than not being built by people with disposable incomes, which translates into more space. Rose Quint, assistant vice president of survey research at the National Association of Home Builders told The Wall Street Journal that the market has shrunk to such a level where now a very small portion of buyers are driving it.
2. Foreclosures and more Foreclosures – After the housing bubble, the country’s foreclosure rate shot through the proverbial ceiling and ended up stoping somewhere between here and the moon. Though things have settled down now, there are still many on the market – most of the small- to mid-sized. Contractors don’t need to build any new houses that particular size, because the inventory in that respects is already filled out.
3. Bigger is Better, Or So We Say – In typical American fashion, houses are getting bigger for the very simple fact that we want them to, according to data from both the NAHB and Trulia. On average, the two sources confirmed, Americans want houses with 17 percent more space than they their current home allows. Trulia’s Chief Economist Jed Kolko told the Journal, “As incomes go up, people are able to consume more housing, more entertainment, more tech and everything else.”
4. Supplying Demand – In his interview with the Journal, Quint said that building homes bigger isn’t necessarily more profitable for builders. However, big homes are what is selling right now, so builders are satisfying that demand.