New single family homes are getting smaller, and the trend is likely to last well beyond the recession, according to research from the National Association of Homebuilders (NAHB). The median size of a single-family home dropped from a peak of 2,268 square feet in 2006 to 2,100 square feet in 2009.
Homebuilders attribute the decline to consumers’ desire to keep energy costs down, the lack of equity in existing homes available to roll over into new ones, tighter credit standards, less interest in buying homes as investments, and a growing number of first-time buyers.
Despite the trend toward smaller homes, the average number of bathrooms and bedrooms has showed little change, while three-car garages, fireplaces, patios and decks have declined in popularity.
Recession is still on; the National Bureau of Economic Research finds that the economic recession technically ended in June 2009, but for 81 percent of Americans it isn’t over just yet, according to the American Pulse survey from BIG Research.
Many people are still feeling the pain of the recession; 78.6 percent report they have lost wealth in the past two years, compared with 21.4 percent who say they have not. Reasons for the perceived drop in wealth include a decline in their homes’ value, job loss and declining interest rates on savings accounts.
Looking at First-timers; spurred on by the now-expired homebuyer tax credit, first-time homebuyers accounted for a record 50 percent of all home sales in 2009, up from 47 percent in 2008, according to the “2010 NAR Profile of Home Buyers and Sellers.” The vast majority (93 percent) of first-time buyers took advantage of the tax credit, and 95 percent chose a fixed rate mortgage.
The median age of first-time buyers was 30, and the median income was $59,000. The typical entry-level buyer purchased a property with 1,540 square feet that cost $152,000 and most first timers say they plan to hold the property for 10 years.
First time home-buyer tax credit fraud; the IRS has reported it has suffered nearly $25 million in fraudulent credits from the first time or move up home-buyer credit. Approximately $9 million in credits were issued to prison inmates (they have more than plenty of time to figure that one out!). Other credits were issued to first time home-buyers who bought the property they already lived in from their relatives. No one moved in and no one moved out.
Homeownership Concerns; while 80 percent of Americans still believe buying a home is a good financial decision, concerns about job security remain a barrier to homeownership for many potential buyers, according to NAR and its “2010 Pulse Survey.” Seven out of ten Americans say job layoffs and unemployment remain big problems in their local areas, and eight out of 10 believe these issues are a barrier to homeownership.
More than two-thirds of respondents (68 percent) believe now is a good time to buy a home, down from 75 percent just a year ago, but up from 66 percent in 2008 and 59 percent in 2007. Respondents say the biggest obstacle to homeownership is having enough money for a down payment and closing costs (79 percent), lack of confidence in getting approved for a mortgage loan comes in at 73 percent.
Meanwhile, renters are warming up to the idea of homeownership. More than one-fourth of renters say they are thinking more about buying a home than they did a year ago. Nearly two thirds (63 percent) say homeownership is a priority in the future, and nearly 40 percent say it is one of their highest priorities.
It’s most definitely time for all the renters/potential home buyers to see how big of a home they can qualify them for in today’s market. If they had lost their home, they can become homeowners again for a lot less.
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