Home Size Increase Bucks Trend

Home sizes increased between 2010 and 2011, reversing a decline from 2007 to 2010.

Between 2007 and 2010, smaller and smarter homes were on the rise, or so everyone thought. The average size of a new single-family home in the U.S. fell from 2,504 square feet to 2,381 square feet, according to U.S. Census data. Designers and architects took comfort in a renewed focus on efficiency and functionality bred by the housing market collapse.

Then through 2010 and 2011, new single-family home sizes averaged 2,522 square feet ?EUR??,,????'??? larger than during the height of the boom. Speculation began over whether smaller homes were ever really in vogue, or just a necessity due to tight credit, high unemployment, and a lack of equity.

"Everything we heard from builders, architects, consumers ?EUR??,,????'??? was pointing to a smaller home,?EUR??,,????'?? Rose Quint, assistant vice president of survey research at the National Association of Home Builders, told Builder Magazine. "For all these years, the trend was going [down], and then in 2011 it reversed."

Lars Hansen, president at Boise-based Brighton Homes, attributes the decline in part to the now-expired homebuyer tax credit, which he says incentivized builders to build smaller homes in an attempt to lure tax-credit buyers.

Since the program ended, builders have turned to larger homes to adapt to the market?EUR??,,????'???s top-down recovery. "After the tax credit expired, we jumped to things over $300,000 ?EUR??,,????'??? Some builders are rebranding divisions as move-up, rather than entry-level, buying [larger] lots in communities that are somewhat distressed," Hansen told Builder.

Quint also attributes the national numbers to the top-down recovery. "The people who were able to buy a home last year had super good credit, super good savings, super good employment ?EUR??,,????'??? otherwise you could not get a loan. New single-family home starts were 75% lower [in 2011 than 2005], so it?EUR??,,????'???s such a tiny market now that this small group of buyers?EUR??,,????'??? preferences are dominating the market."

Like Hansen, Quint is betting things will adjust as the pool of buyers becomes more diverse. "The moment first-time buyers are able to come back into the market, and both buyers and builders regain access to credit, we expect sizes to ease again," she says. "That?EUR??,,????'???s very odd for those jumps to have taken place in one year."