Are new first homes getting smaller?
As home affordability continues to challenge buyers, builders are now exploring the market for smaller, more affordable homes – as little as 400 square feet.
NEW YORK – As home affordability becomes a concern for many, homebuilders are answering the call for affordable, smaller homes, with some measuring as little as 400 square feet.
So-called "tiny houses" are popular among retirees and minimalists looking to simplify their lives while still owning a home. With the increase in the 30-year fixed mortgage rate to almost 8%, the minors are building the size and scope of the houses to meet the affordability needs of the buyers.
These homes can also become "first homes" for first-time buyers. Of new homes being built in America, less than 1 percent are under 500 square feet, according to Zonda, a housing information and consulting firm.
Ellie Wolf, Zonda's chief economist, said: "Their existence is instructive. All the uncertainty in recent years has only strengthened the desire to own homes, but the prices of land and materials have risen too much. So, something has to give, and what the builders are doing now is to check the market and ask what is going to work."
In the last five decades, the buyers of the houses are more and more couples without children, singles and empty nesters, rather than families with three or more children.
State and local governments are also jumping on the compaction bandwagon, passing bills to make it easier for builders to build smaller units at higher densities.
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