US property buyers downsizing as small and cheap becomes more popular
|Monday, 29 June 2009|
Property buyers in the US are looking at smaller places and are increasingly seeking out smaller homes that are cheaper to furnish and heat.
As a result developers are looking to build smaller properties and make a point of offering well insulated homes and those with eco friendly features. They are also cheaper to build.
Cheaper property is also expected to sell well as they are cheaper to finance in the current recession. And they are cheaper to fit as buyers want cheaper kitchens and other fittings. Marble kitchen counters are out and Formica is growing in popularity.
Steve Hilton, chief executive of Meritage Homes said most of its customers are first time buyers who want smaller properties. Typical is a three bedroom, 1,100 square-foot home for $95,000.
A new survey from the American Institute of Architects found that Americans increasingly prefer smaller homes and lower ceilings, in part because of energy costs.
According to the trade group 50% of architecture firms find clients are choosing homes with smaller square footage, compared with 13% who said so in 2005.
An analysis of homes sizes over the years shows that new home sizes grew for much of the post-World War Two period, from less than 1,000 square feet in the 1950s to 1,400 square feet in the 1970s and up to more than 2,400 square feet in 2004.
According to US Census data the average home size fell to 2,200 square feet in 2008, the first decline for 13 years and it is expected to fall even further in 2009.
The reversal reflects Americans' nervousness about the economy and about the stability of their jobs, as well as restrictions lenders have imposed as a result of the ongoing financial crisis.
But some experts are warning developers that even cheaper, smaller homes cannot compete with the bargain prices found in the foreclosure sector. 'Despite price reductions and value-add upgrades, newly constructed homes simply cannot compete with the values found in the existing homes market,' said Bob Walters, chief economist of Quicken Loans.
'Home sizes have been trending down recently. The era of the McMansion could well be over,' AIA chief economist Kermit Baker.
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