Prepare For Smaller, More Affordable Housing
Have you been attempting to buy a home, but increased mortgage rates and home prices are restricting your options? If so, here's some good news: According to Ali Wolf, Chief Economist of Zonda, smaller, more affordable homes are on the way:
“Buyers should expect that over the next 12 to 24 months there will be a notable increase in the number of entry-level homes available.”
Smaller houses are already here in certain respects. When the pandemic struck, the definition of home shifted. People needed the space given by their homes not just as a place to live, but also as a place to work, attend school, exercise, and do other things. Those who had that area were more inclined to preserve it. Those who didn't were forced to sell their smaller homes in order to move up to a larger one. That meant that homes on the market during the pandemic were smaller than those on the market before the epidemic - and that trend continues today (see graph below):
This graph also demonstrates how the size of homes on the market fluctuates seasonally. Larger properties typically come on the market over the summer months when families with children out of school are looking to relocate.
Based on historical trends and the fact that fall is quickly approaching, we may expect smaller, more affordable homes to enter the market for the rest of the year.
That’s great news because, as Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), states, the need for these types of homes has gone up recently:
“. . . as interest rates increased in 2022, and housing affordability worsened, the demand for home size has trended lower.”
What Does This Mean for You?
The seasonal trend of smaller homes coming to the market in the later months of the year, coupled with builders bringing smaller, more affordable newly built homes to the market right now, is good news – especially if you’re finding it difficult to afford a home. Mikaela Arroyo, Director of the New Home Trends Institute at John Burns Real Estate Consulting, says this about a potential increase in the availability of smaller homes:
“It’s not solving the affordability crisis, but it is creating opportunities for people to be able to afford an entry-level home in an area.”
If a smaller, more economical home appeals to you, good news: they're on their way. Let's connect to stay up to date on what's available in our region.