Houses are just not as affordable as they used to be. This is a sad truth that we have to figure out how to navigate. People need to live somewhere, and a budget can only stretch so far. For some home builders, the solution is to make homes that are just smaller.
During the peak Covid Era, people wanted lots of room at home to spread out and have some privacy from other family members who were also stuck there. Interest rates during this time were in the twos and threes and home prices were significantly lower as well. Today, prices and interest rates are up, while inventory is down, which has created a seemingly impossible situation for many buyers. All this on top of the fact that in May of this year, 37% of starter homes were purchased by cash investors.
New build homes have always been a great place for first time buyers to get into a home, usually without the amount of competition you might find at a resale home. This past spring, about a third of homes listed for sale were new construction. But new homes can be pricey as well, and buyers just can't afford more. To combat rising costs, builders are now building smaller homes.
In 2022, construction on homes with fewer than three bedrooms was up 9.5%. In addition, builders constructed 37% more townhomes and condos. This follows the trend of having smaller household sizes and also people heading back to the office.
New home developments still have plenty of options when it comes to sizes and floorplans. Nowadays, you're more likely to have some more affordable options as well! This is great news, especially for first time buyers, who have been displaced in the starter home market by big cash investors. If you're thinking about purchasing a brand new home but don't know where to start, let us know!