House sizes are up. Lot sizes are down. And the gorilla in the room issue is the squeeze between buying affordably and building profitably.
Converging trends, one economic, the other social behavior.
Floor plan square footage is up, of course, because people with more wherewithal have powered the first several years of the housing recovery, and their purchases are of larger homes. They're a greater part of the new-home buyer mix than is typical for reasons you know well. Will floor plan square footage spaciousness continue to prevail, even as a Sarah Susanka "Not So Big" mindset gathers currency among people who can choose to have it either way? Will livability trump fear of resale repercussions? Hard to say.
Either way, as volume builders open new communities and record sales to more buyers in the lower-price zones of the price spectrum, home size trends may show a reversion to historical means. Most people expect that.
The survey shows that the median size of the 648,000 single-family homes completed in 2015 was 2,467 square feet. Of those new homes, 47 percent had four or more bedrooms compared to 35 percent five years earlier and 38 percent had three or more bathrooms compared to 25 percent.
Despite the trend towards living large, homes are going up on smaller lots. The share of homes completed on lots under 7,000 square feet has been growing since 1999. The vast majority of homes are built inside metropolitan areas.
Lots, we know, are expensive, not just to buy from the seller, but to permit, develop, and transform into a home site. One out of every four dollars a buyer pays for a new home goes to pay local, county, state, regional, and national fees, taxes, and expenses.
Maybe that's a fair number in the end. Do you think? Whether it's a fair number or not, the likelihood that it will go down is nil.
So, back to the gorilla in the room issue, being able to buy affordably (if you're earning a median-income wage in a given market) vs. being able to build profitably. There are quite a few people who believe that, with the exception of a few companies whose business and workflow models allow them to acquire lots and build homes at rock-bottom low direct costs and overhead expense, the twain don't, and can't, meet.
House sizes will revert closer to long-time norms as more of the lower-cost homes reach the market and get absorbed in the next stage of recovery. Density, or smaller lots, which allow for more homes on less acreage, is one of the few remaining tactics developers and builders have to respond to the regulatory cost spiral of bringing lots online.
The biggest question has to do with smaller, "starter" homes, for rent refugees, for new and emerging family households, for those America has always found good reason to invest in as the future foundation of society.
In other words, do we want an American Dream? Or is that now a pipe-dream?