From the NAHB:
http://eyeonhousing.org/2014/02/25/why-are-new-homes-getting-so-big-look-at-whos-buying-them/
Preliminary data provided to NAHB by the Census Bureau on the characteristics of homes started in 2013 show the trend toward larger homes continued unabated last year, as did the share of new homes with 4+ bedrooms, 3+ full baths, 2-stories, or 3-car garages.
The average size of new homes started in 2013 was 2,679 square feet, about 150 square feet larger than in 2012 and the fourth consecutive annual increase since bottoming out at 2,362 square feet in 2009.
New homes started in 2013 were also more likely to have additional features: nearly half, 48%, had 4 or more bedrooms; 35% had 3 or more full bathrooms; 22% had a garage for at least 3 cars; and 60% were 2-stories.
The share of new homes started with these features has been increasing consistently for 3 or 4 years, and the most obvious question is “why?” Why are homes getting this BIG?
To get an answer, just take a look at WHO is buying new homes?
The typical new home buyer in recent years has been someone with strong credit scores and high levels of income. To the first point, the graph below shows how the average credit rating of all US consumers has remained rather flat over the last few years (blue line), while the average credit rating of mortgage borrowers (red line) took a dramatic jump after 2007. By 2013, the gap between the two measures was 58 points, compared to 33 points in the early 2000s.
To the second point, the graph below shows the rising trend in new home buyers’ income in recent years.
In 2005, the median income of new home buyers was $91,768. By 2011, it had increased by more than 17% to $107,607. It is not too surprising, therefore, to see home size and features continuing to trend upward, given that those buying new homes are precisely the kind of buyers who generally purchase large, feature-loaded homes.
http://eyeonhousing.org/2014/02/25/why-are-new-homes-getting-so-big-look-at-whos-buying-them/
Three words “buildable lot costs”
Unless you got some really cheap land, there are only two profitable things you can build.
McMansions or Condos.
But even new condos are pushing 2000sqf these days.
Good point – “highest and best use” encourages the extremes.
We’ve got the “who”, we’ve got the “what”, but I still don’t get the “why”.
Is there a lack of 4+ bedroom, 3 car garage homes?
To me more home means more furniture, cleaning and upkeep not to mention a yard. Usually the locations mean more driving.
But at the same time it’s pretty clear that most people want a house, on a lot and don’t really want to buy attached condos. Except maybe to rent the condo to those who will not be able to buy, possibly ever.
Low six figure income is considered rich?
25 point spread in the credit score is nothing. One year’s worth of on-time car payments will give you a bigger jump than that.
@Mozart
A lot of the new builds in SD county have the grandma wing option. In the Palo Verde homes up here in Carlsbad, the model homes have small fridges installed in the guest (4th or 5th) bedroom. They are set up like small hotel rooms. Sure, you could argue that they are glorified guest rooms, but I know when we bought our 2600 ft place we needed that 4th bedroom for long term guests.
Well, I guess we now have the “why”.
And that seems sensible especially when an older parent moves in or a young couple now has to live with their parents in order to save to buy a home or someone works from home. Not a bad thing and prudent, but, I also don’t think this is the majority of cases. I think it’s just people wanting bigger and bigger, aka conspicuous consumption.
And it runs contrary to a lot of media that says everyone wants to now live in a condo. Some do, most don’t.
And it is a harbinger of a big affordability issue to come unfortunately.