Homebuyers Search Out Smaller Homes

First-time buyers are making new waves in the housing market as they opt for smaller and less expensive homes.

With an economy slowly making it's way out of a recession, this comes as no surprise to many. Buyers are redefining their spending across all segments of the economy. Everyone from executives to busy families are changing the way they spend. Instead of nights out, they are cooking family meals. Instead of long vacations, families are opting for local destinations. And instead of large McMansions, buyers are choosing smaller, more economical houses.

In the housing market right now, it's about buying small. Homeowners surveyed by Better Homes and Gardens magazine say downsizing was becoming a bigger priority.

So, how are builders responding to this change in demand? First-time buyers are a growing market segment, with 41 percent of buyers between 2007 and 2009 being first-timers. ("Characteristics of New and First-Time Home Buyers"). That's a big segment.

The National Association of Home Builders (NAHB) reports that first-time buyers bought homes averaging 1,874 square feet, significantly below the 2,549-square-foot home purchased on average by those trading up. Forty-six percent of first-timers bought homes smaller than 1,500 square feet. And The Wall Street Journal reports that "just 9 percent of the people surveyed by Trulia said their ideal home size was over 3,200 square feet. Meanwhile, more than one-third said their ideal size was under 2,000 feet."

"Builders are increasingly gearing their homes to the needs of first-time buyers, and we expect the trend to continue in the period ahead as the economy begins generating more jobs and more people in their 20s form households," said Bob Jones, chairman of NAHB and a home builder from Bloomfield Hills, Mich.

"New homes are a better match for the needs of the population in general," Jones said. "Compared to what is typically available in the existing housing stock, they are more energy-efficient, easier to maintain and have designs better suited to today's lifestyles."

Time.com reports that the change is generational, as well, with Generation Y (those born between 1982 and 1995) shoppers looking for simple starter homes, with minimal, but efficiently used space.

Kermit Baker, the chief economist at the American Institute of Architects, notes, "We continue to move away from the McMansion chapter of residential design, with more demand for practicality throughout the home." In today's market, McMansions are simply out of place for both those looking for economical and environmentally friendly choices.

Source: Realty Times