Less is More- Square Footage Trends in Real Estate

Lindsey Friedman May 23, 2017 Buying Colorado Home Owning Market Trends

The tiny home trend is everywhere. Forbes Magazine recently wrote an article about why buying a tiny home is a mistake:

  1. Their trendy- meaning, it’s a passing fad.
  2. They’re not great on resale.
  3. By the same token, they speak to a limited segment of the population.
  4. They’re actually too small
  5. They’re expensive- you’ll probably have to pay cash for your tiny house since lenders have minimum square footage requirements and liken them to mobile homes.

Denver just recently approved a temporary zoning permit in the RiNo Arts District (38th and Walnut Streets) that would allow 14 homeless people to live in tiny homes. These homes must move every 6 months, as permitted, but The Colorado Village Collaborative, an organization that includes a variety of groups, hopes to create more permanent zoning for these tiny home villages. Similar projects are already providing shelter for homeless populations in Seattle, WA, Austin, TX and Portland, OR.

The development will include 11 tiny homes that can be placed on flat-bed trucks and moved elsewhere. The Collaborative wishes to apply for permanent zoning which will allow construction of a communal kitchen, bathrooms and showers. Another development is planned at 2015 Glenarm Place, currently owned and occupied by St. Andrew’s Episcopal Church.

Interestingly (tiny homes aside) for the typical homebuyer, average home sizes are shrinking, after years of increased square footage.

That’s according to the US Census Bureau, which reports that the average home built in 2016 was 2,634 square feet, representing the first decrease in home size since 2009.

“The data on new home characteristics show a pattern,” noted Rose Quint, assistant vice president for Survey Research at the National Association of Home Builders (NAHB). “2016 marked the end of an era that began in 2009 when homes got bigger and bigger with more amenities. I expect the size of homes to continue to decline as demand increases from first-time buyers.”

First-time homebuyers typically choose smaller homes, fueling the trend, notes the NAHB. But modern home design may play a role, as well. Hal Looney, Arizona president of Shea Homes Active Lifestyle Communities, explains that homes feel bigger now, due to open concept design. “We’ve engineered out the hallways and the wasted space and they’re more open floor plans and so when you walk in them they feel more grand,” he said. “A 2,000 square foot home today feels like a home might have felt 10 years ago that was 3,000 square feet.” Like others, Looney predicts smaller homes will be desired as time goes on, for one very practical reason: they cost less. Folks of all age groups prefer lower maintenance, less cost homes- from empty-nesters to younger home buyers who are all on the move and would rather spend their money traveling and recreating.

I am finding that many home buyers I work with care less about the square footage total, especially when I ask them for their criteria before we start the home search. They prioritize configuration, layout and home style. And even more important to them from an affordability and investment standpoint is location- which allows for a certain desired lifestyle.

Survey Research at the National Association of Home Builders



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