Understanding the Smaller Home Trend
What Do Builders Need to Know About Smaller Homes?
You already know that square footage in homes is trending smaller, and that some buyers are extremely excited about innovative new trends like tiny houses.
But, how can you put this newfound awareness to work within your residential construction business? Your designs and floorplans might have to change, but you could also realize significant cost savings, among other benefits. Here’s what you need to know about the smaller home trend.
Smaller Houses Are Actually a Sign of an Improving Economy
According to the National Association of Home Builders, the decline in the size of new single-family houses is a sign that the economy is getting stronger.
That’s because the housing recovery now includes younger buyers entering the market, and builders need to offer a larger variety of options for different budgets. One of those options is gaining more popularity than others, too.
More Buyers Want Townhomes than Ever Before
Jim Clarke, a builder in Detroit, has seen a massive uptick in townhouse desirability. He explains the trend simply by saying, “… young people want them. We’ll do as many of these projects as we can get our hands on because there’s definitely pent-up demand among millennials for a new home that’s more affordable.”
Clarke also mentions that selling townhouses can be difficult in some markets, due to the strict lending standards of banks and credit unions. Thankfully, this seems to be changing as lenders take notice of the changing needs of consumers.
Millennials Aren’t The Only Buyers Who Want Smaller Homes
NAHB also spoke to Bob Youngentob, a luxury townhome builder near Washington, D.C. He offers an additional layer of information that builders will find helpful, pointing out, “There’s also a large portion of older professionals and empty nesters, and they all want many of the same amenities that come with being in an urban location that’s convenient to retail, transit and job centers.”
This is great news for builders, since it gives them an even broader segment of the market to work with. Just remember that many Boomers have different preferences than their younger counterparts.
Smaller Homes, Like Townhouses, Are Cheaper To Build
This next consideration probably doesn’t come as much of a surprise to you — smaller houses cost less to build.
Clarke also mentions another bonus: infill opportunities. He explains, “You can build between 12 and 17 units on a single acre. That means you can buy infill sites that you couldn’t otherwise develop unless you have really expensive housing.”
If you’re building in an existing urban area without large swaths of available land, this is a massive benefit to the smaller home trend. You can easily and effectively work with smaller lot sizes while still building homes that are in demand. Since many cities have sizeable amounts of unused land that hasn’t yet been developed, this could represent a big business opportunity.
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