Declines in Home and Lot Size Are Easing

Downsizing has been the dominant theme for the housing market over the past several years, according to Kermit Baker, AIA chief economist. As falling house prices pushed the number of foreclosed properties to record levels, new homes have been getting smaller and more affordable in an effort to compete with these distressed properties.

During the run-up in housing prices through the middle of this past decade, home sizes increased quite dramatically. In the AIA's first Home Design Trends Survey for the first quarter of 2005, almost a third of respondents reported home sizes to be increasing, while just 17 percent reported declines.

Since 2005, however, a rising share of respondents reporting declining home sizes. By the 2010 first quarter survey, almost 60 percent of respondents reported declining home sizes, while fewer than 3 percent indicated that they were increasing.

However, the 2011 first quarter survey finally suggests that this trend is moderating. Respondents who reported home sizes to be decreasing fell to 52 percent, while 5 percent indicated that sizes are increasing. While this doesn't suggest that home sizes are suddenly and dramatically increasing, it does indicate that the pace of decline has slowed.

Residential architects are reporting a similar trend for the volume of homes, as the share reporting declines fell from 21 percent to 18 percent. Until home prices begin to accelerate, it is unlikely that homes sizes and volumes will show significant gains.

- Courtesy of AIA