Owners prefer to build small homes outside of metro areas

Andrey Kamenov

Andrey Kamenov, Ph.D. Probability and Statistics

As anyone who has looked to buy a new house likely knows, there are basically four types of houses. Some are built for sale or for rent, and some are built by owners, either with help from a contractor or by themselves. The U.S. Census Bureau’s Survey of Construction provides us with this data on each surveyed home.

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As we see here, there is no significant trend for any category. Approximately two in three homes are built for sale, and the numbers of owner-built and contractor-built houses are roughly the same. We are currently seeing a slight decrease in both those categories, but given the history of the last 13 years, there’s no reason to expect it to last.

Let’s see whether there are any significant factors influencing these percentages. To do this, we focus on owner-built homes.

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First, we notice a sharp difference between houses located in metropolitan areas and outside of them. While only 6 percent of the former are owner-built, this percentage increases more than three times (to 20 percent) once we get outside of metropolitan statistical areas.

Additionally, we see a clear relation between the number of owner-built houses and their size — owners clearly prefer to build single-floor houses with only two bedrooms. Once we consider larger houses with two stories or with three (and especially four or more) bedrooms, the share of owner-built homes drops to approximately 5 percent.

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As you can see in the map above, East South Central states see the largest percentage of owner-built homes (around 14 percent). On the other end of the spectrum are the Mountain and South Atlantic divisions with 4 and 5 percent respectively.

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About Andrey Kamenov

Andrey Kamenov

Andrey Kamenov, Ph.D. Probability and Statistics

Andrey Kamenov is a data scientist working for Advameg Inc. His background includes teaching statistics, stochastic processes and financial mathematics in Moscow State University and working for a hedge fund. His academic interests range from statistical data analysis to optimal stopping theory. Andrey also enjoys his hobbies of photography, reading and powerlifting.

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