The American Dream of owning a home may have survived the recession but it didn’t come through unscathed. Many recent surveys and studies have shown that the average size of new homes in the United States has been decreasing for almost a decade as generational advancement, new technologies and changes in lifestyle affect the demographics of American home buyers. Meanwhile in cities like Los Angeles, local governments are banning the construction of so-called “McMansions,” limiting growth and sprawl. What does this decrease in home size mean for builders and how can home building professionals leverage this change? Let’s take a closer look at some of the statistics and trends.
65 million Baby Boomers can’t be wrong.
In the United States alone, more than 65 million Baby Boomers are on the verge of retirement. The Demand Institute, in a recent study on “The Shifting Nature of U.S. Housing Demand,” made it very clear that economics and aging are having a dramatic effect on boomer housing demands. “Demand for smaller homes will be driven partly by the many baby boomers who delayed retirement because of financial concerns during the recession,” states the report. “When they do eventually retire, many will not move. But those who do are likely to downsize.” Other factors cited by baby boomers included a desire to be closer to friends, family and relatives with accessibility to health care and skilled nursing facilities. For builders, this means investing in smaller homes, condos and townhomes with accessibility and green technology features in walkable neighborhoods may be a very wise investment in the years to come.
Younger generations are growing up—fast.
Millennials, or Generation Y, are persons ages 18-34. They have often been unfairly maligned as a generation of ambitionless, technology-addicted and selfish children, many of whom still live at home. However, it’s important to look at their demographics before making that charge. A recent study found that about half of Gen Y buyers bought a home simply out of the desire to own a home of their own. After exiting high school and college into the midst of the worst recession in decades, Millennials are cautious with their money, and are likely to be equally cautious with their home buying habits. The same study found that Generation X, born from the early 1960s through the early 1980s, is even further down the road towards adulthood. These buyers often cite the need for a larger home due to growing families. Gen X-ers are also more likely to change homes more often, largely due to job-related relocations. Careful analysis of generational attitudes, demographics and buying trends can potentially yield lucrative niche markets for smart, attentive builders.
Less is more.
Everyone knows the so-called “Tiny House” movement is hot right now. While the typical American home is around 2,600 square feet, advocates for the tiny home movement rally behind living spaces that are 100 to 500 square feet, using technology and design to maximize every single space in the home. What analysts sometimes miss is the “why” behind the movement, and how those shifting attitudes translate to average homes as well. Basically, there’s a societal shift away from conspicuous consumption and people are embracing comfort, solace and connection over the accumulation of possessions. So what does this trend mean for designers and builders? There are certain design elements that are important for smaller homes. First, you can’t afford to waste any space, even in the building shell. That means making spaces like attics, crawlspaces and basements 100% functional areas from the day the owner moves in. Secondly, smaller homes require more careful consideration when it comes to furnishings. This may mean leaving a less ornate design inside the house so owners are capable of customizing it themselves—see Ikea’s 621-square-foot home design for an example of clever outfitting. Finally, building in a transition zone between indoor spaces and a home’s outdoor is always a good idea. The smaller the inside of a home is, the more important a porch or a tiny veranda becomes.
Paying attention to buyers’ desires for less financial burdens, ecologically sustainable designs, less maintenance and more simplicity, builders are more likely to find success by building smaller homes and studying urban density to discover what new ideas are emerging in a changing market.
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