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Recently I've seen reports that current buyers apparently prefer smaller houses. Or maybe it's that they can only afford the smaller houses. Same result, either way.
I've also read (and noticed) that very little new construction includes such houses. Apparently builders continue to build mostly 3,000-5,00 sf McMansions. What do you make of this?
I realize that builders make more money when they build big, but if nobody is buying them you'd think they'd start building smaller. Then again, I'm not in the construction biz so what do I know?
Recently I've seen reports that current buyers apparently prefer smaller houses.
Apparently builders continue to build mostly 3,000-5,000 sf McMansions.
What do you make of this?
Reporters are talking to two (or more) different audiences.
First timer buyer and budget conscious = smaller
Move up buyer and spendthrift = larger
An issue is the margin of profit on investment (ROI) when building a home. The bigger the home, the more economies of scale, the less per square foot to build something. Selling a larger home equates (often) to a larger return on the investment. Investors seek profits.
Recently I've seen reports that current buyers apparently prefer smaller houses. Or maybe it's that they can only afford the smaller houses. Same result, either way.
I've also read (and noticed) that very little new construction includes such houses. Apparently builders continue to build mostly 3,000-5,00 sf McMansions. What do you make of this?
I realize that builders make more money when they build big, but if nobody is buying them you'd think they'd start building smaller. Then again, I'm not in the construction biz so what do I know?
Thoughts?
Not true, depends on the area. We built in NW Indiana last year and the builders home plans start at 1700 square feet and the largest plan is 2,700. Most of the home builders around here are not building bigger homes as that trend is gone. There are still a few that offer bigger plans of course, but in our area the homes being built are closer to 2000 sq ft than 3.
Recently I've seen reports that current buyers apparently prefer smaller houses. Or maybe it's that they can only afford the smaller houses. Same result, either way.
I've also read (and noticed) that very little new construction includes such houses. Apparently builders continue to build mostly 3,000-5,00 sf McMansions. What do you make of this?
I realize that builders make more money when they build big, but if nobody is buying them you'd think they'd start building smaller. Then again, I'm not in the construction biz so what do I know?
Thoughts?
The market provides what the market demands.
Maybe the people who want smaller houses are buying used houses. But obviously there is adequate demand for these (in my opinion) stupid, ugly McMansions.
Recently I've seen reports that current buyers apparently prefer smaller houses. Or maybe it's that they can only afford the smaller houses. Same result, either way.
I've also read (and noticed) that very little new construction includes such houses. Apparently builders continue to build mostly 3,000-5,00 sf McMansions. What do you make of this?
I realize that builders make more money when they build big, but if nobody is buying them you'd think they'd start building smaller. Then again, I'm not in the construction biz so what do I know?
Thoughts?
New, small to medium sized SFHs are just not being built in many locations. Median HHI in my area is between $30k-$40k, depending on the town. The cheapest new construction that I've seen is around $200k for about 1500 sq. ft. Most new construction is over 2000 sq. ft and over $250k. Compared to many areas, this is a bargain, but these are not fancy homes by any stretch and seem out of sync with local income realities.
Personally, I don't know who is buying them - most likely retirees from outside the area bringing money in. I don't know many people able to afford homes in that range. Most folks in this area can only afford older homes not in great shape.
Another cause for lack of smaller new homes ( <= 1000 sq ft) can be city planning and zoning rules. The town where I lived for 38 years (1973-2011), over the years steadily increased the minimum requirements of size and appearance that they would approve for new construction. The "starter" house I bought new in 1973 ( 3/1 ranch on slab) would not be allowed to be built today.
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