Homebuilders Scale Down as Homebuyers Think Smaller

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The recession has taken a bite out of the McMansion, and experts don't expect homeowners will be supersizing their homes again anytime soon.

The U.S. Census Bureau released new figures, based on homes completed in 2009, which show that the average square footage of a new, single-family home completed in 2009 was 2,438; that is down from the peak of 2,521 square feet in 2007.

While the decision by many purchasers of new homes to build smaller mirrors trends from previous recessions, many say the difference this time is that they don't expect to see homes gaining in size in the foreseeable future.

"Buyers are remaining cautious," said Stephen Melman, director of economic services at the National Association of Home Builders. "If there's any way to save money, they will. Smaller homes equal smaller costs, including energy bills. The job market is still shaky, we don't know what will happen with energy prices. You want to protect yourself a bit, and all these factors are going to come into play when you think about how much house you need."

Who needs two stories, for example, when you can make do with one?

The Census data echoes a report earlier this year from the National Association of Home Builders that found the median size of new homes started in the fourth quarter of 2009 was 2,155 square feet. That's a drop from the first quarter of 2007, when the median home size was 2,309 square feet.

"There was a period when home prices were inflating, so, from an investment point of view, people wanted to purchase as much home as possible because they knew it would increase in value," said Melman. "Now, buyers are much more practical. It's not so much an investment as something they are going to actually live in. Do they really need five bedrooms when four will do?"

One fewer bedroom seems to be a sacrifice new-homebuyers are making. The Census Bureau reports that in 2006, 39 percent of new homes had four bedrooms or more; that number dropped to 34 percent in 2009. Homes with three bedrooms increased from 49 percent in 2006 to 53 percent in 2009.

They are also willing to give up stairs. In 2006, single-story homes were 43 percent of new construction; by 2009, it was up to 47 percent. In 2006, 57 percent of all new homes were two stories; by 2009, it was down to 53 percent.

Melman said that, besides bedrooms, homeowners are giving up formal dining rooms, while "designers are removing walls, to give people a sense of space. Rooms are multi-use, instead of reserved for one function," he said. More homeowners are looking at what will make their lives easier and more efficient, rather than elaborate rooms that require a lot of decorating and upkeep.

Since the economic downturn, builders of new homes have had to compete with a glut of homes from foreclosures as well as sellers. Building smaller homes has become one way to compete. Even those builders who are still putting up somewhat larger homes are scaling back. In suburban Atlanta, Michigan-based Pulte Homes took over another builder's development and has been putting up houses that, while still 3,200 square feet, are at least 300 square feet smaller than existing homes there.

"You do try to match what is already there as much as you can," Alicia MacPhee, Georgia division president for Pulte Group, told the Atlanta Journal and Constitution. "But you can't lose sight of the big picture, the consumer."

And that consumer is actively scaling back to "cozy" as opposed to palatial, as they negotiate a new economy where a home is less of a piggy bank and more a place to live.


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