American’s are buying smaller houses; an uncommon post-recession behavior. Typically after a recession, it turns into a buyers market, and wealthier buys buy larger homes for less money. However, this has not been the case.
That’s a trend reversal from the typically increasing post-recession home size. That increase was fueled by home loan lending scarcity and financial belt tightening by cash-crunched consumers who declined to buy or sell homes following financial hardships, leaving a buyer’s market for wealthier home buyers. Those buyers then purchase larger homes for less money, the report found.
That’s not what’s happening now though, with newly built home sales increasing 12% nationally from June to July and the largest portion of that increase going to low-to-mid-range priced homes.
“The majority of it is a question of affordability,” said Bob Youngentob, president of the Maryland-based urban townhouse construction firm EYA. “People want to stay in closer-in locations,” he told CNBC. “Closer-in locations tend to be more expensive from a land and development standpoint and so, the desire to be able to keep people in those locations is translating into smaller square footages and more efficient designs.”
Increasing home prices and lack of financial resources may play a factor as well.
The finance site SmartAsset.com in December found that Millennials working in many major American cities could scarcely afford to buy housing space.
A Millennial New Yorker, for example, where the local median income was $42,108 in December, could only afford to buy 165 square foot home, if such a home existed. In Denver, the same purchasing power would get said Millennial a 173 square foot home, and in Washington, D.C. he or she could afford 218 square feet, according to the report.
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