Home Sizes Shrink

The median American home size has dropped to 2,100 square feet -- down from 2,300 at the peak of the housing boom in 2007 -- according to a study by Trulia.com, a real estate website. Each year, Builder magazine designs a concept home to reflect the current state of the market. This year, the "Home for the New Economy" is just 1700 square feet.

In part, the downsizing trend is a product of necessity. During the years of the housing boom, many home expansions were financed through home re-financing deals. Now that home loans have frozen up, people are less likely to be able to afford building that new game-room they'd been wanting.

But a broader shift of cultural preferences could also be spurring the shift, experts say. Backyards are also getting smaller, with more homeowners opting for spreads that feature front porches and communal green spaces. Some say that's a sign that Americans are hungering for more of a sense of community in their living environments. So how are homes changing as they get smaller? Builders are increasingly doing away with formal living rooms, sitting rooms and extra bathrooms, which many people have found they don't use.

"The whole glow of bigness kind of wore off all of a sudden," Sarah Susanka, an architect, told CNBC.com. It's time, she added, "to bring some sanity back to the equation."

"This is yet another piece of data that the pendulum is swinging back toward smaller housing in walkable urban locations," Christopher Leinberger, an urban planning expert at the Brookings Institution, told The Lookout. In Leinberger's view, the small-is-beautiful shift comes from established baby boomer homeowners as well as from so-called millennials who are just coming into their first mortgages. "One's downsizing and one's getting their foot in the door," he said. "And both are looking for walkable urban places at higher rates" than is the case among other age demographics.