According to Robert Dietz, economist for the National Association of Home Builders, a greater number of smaller homes will hit the market and counter a trend that has seen the market largely dominated by large homes.
“At this time next year, I would expect a lot of the variables that show size to be flat,” Dietz told the Wall Street Journal. “As those first-time buyers come back, maybe [there will be] some reversal in the characteristics of completed homes.”
Still, recent data suggests large homes are the preferred choice for builders.
According to the Census Bureau’s Characteristics of New Housing, 46 percent of homes built in 2014 had four or more bedrooms, up from 44 percent the year before. Some 44 percent of homes built had three bedrooms.
Meanwhile, homes with two bedrooms or less accounted for only 10 percent of new builds in 2014 – the same percentage reported a year earlier.
But there will be an increased demand for smaller homes in the near future, according to one developer.
“We haven’t seen a decline in the demand for larger homes,” said Dale Francescon, co-chief executive of Denver-based Century Communities to the Wall Street Journal. “What we’ve really seen is an increased demand for smaller homes at a lower price point.”
And while at first originators may lament the influx of smaller homes – which will provide smaller commissions – it should be noted that more affordable homes will entice more buyers into the market and, as a result, more commissions.
Originators may see an influx of first-time buyers in the near future, with housing size trends expected to reverse as builders focus on more cost-friendly, smaller homes.