The Incredible Shrinking Home: The Trend is Small

The Great Recession continues to sap so much of what we Americans hold dear -- our jobs, homes, retirement savings, and optimism. Now comes another low blow: if you do manage to buy a home nowadays, it's likely to be smaller than your neighbor's.

Homes being built now are actually shrinking in size, suggesting that the age of the dreaded McMansion, the hedge fund honcho Greenwich, Connecticut palace and the mega-sized Tony Soprano suburban spread might be nearing an end.

According to the latest U.S. Census Bureau data and stats from the National Association of Home Builders (NAHB), the American home is on a diet. OK, you won't be crammed into a tiny Soviet-style apartment under Obama's Socialist state in the making, but there has been enough shrinkage in home sizes to reverse an enlargement trend that dates back decades.

The median floor area of new homes fell to 2,094 square feet in the third quarter of 2009 from 2,309 square feet at the start of 2007, according to the Census Bureau. It reflects that builders are building in response to the reduced means and inflated concerns of cautious home buyers.

The NAHB has similar findings. Their report claims the average size of a new home fell to 2,480 square feet in 2009 from 2,520 square feet the year before. What's more, the number of new homes with three or more bathrooms declined for the first time since 1992.

Our fundamental belief in the right of every member of the family to have their own bathroom, walk-in closet and changing nook is being challenged. And so what will become of the that cherished design innovation of the boom years, the Great Room?Tossed in the dustbin of design history.

"Maybe house sizes have reached a plateau," suggests Stephen Melman, director of economic services at the NAHB. House sizes have shrunk in previous recessions, he points out, but this time the less-is-more syndrome is more pervasive than ever before and might outlast the downturn.

Consider the story of Dru Schmitt, a multimillionaire who recently built himself a 23,000-square foot French-Country-Manor style home in Boca Raton, Fla. and outfitted the manse with all kinds of ostentatious ornaments, from four kinds of rare onyx in the bedroom to doorknobs and hinges that alone cost $16,000. Shortly after moving in with family, however, Schmitt had misgivings and decided the place was, well, too big, and he put it up for sale, according to the Wall Street Journal's Wealth Report.

Maybe we're all just getting practical, like Europeans with their quaint small cars. Fact is, first time home buyers have less money to spend and are taking advantage of the $8,000 government tax credit, so they want more home for their money, rather than an extra powder room. At the other end of the spectrum, Baby Boomers and Empty Nesters want smaller homes with easier and cheaper maintenance. And almost everyone - thank you, Al Gore! - is thinking green and being sensitive to energy efficiency and high energy prices.

It could be a watershed moment in the history of American homes. After decades of exponential growth and expanding beyond all sensible proportions, we're looking at our homes and lifestyle and coming to a startling conclusion: we can live very well and comfortably on less. We don't need our own Hearst castle. A mere 2,094 square feet will do just fine.
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