GETTING BIGGER
After a mild decline during the housing crisis, home sizes are on the rise again. Here is average square footage in the southern U.S.:
2000: 2,287
2005: 2,463
2010: 2,393
2015: 2,750
Share of new homes built in the South with 3,000 square feet or more:
2000: 19 percent
2005: 24 percent
2010: 24 percent
2015: 34 percent
Source: Census Bureau
Bradley Cooke entered the housing market hoping to find a house in an intown neighborhood but wound trading space for affordability and buying a condo.
“I didn’t see any houses in the price range I wanted in the areas where I wanted to live,” said Cooke, 42, who works for a company that writes studies based on clinical drug trials.
His experience isn’t unusual in the metro Atlanta housing market these days. A lot of the action is at the two ends of the market — smaller spaces like intown condos and larger homes in the far suburbs.
Mid-sized, mid-priced inventory can be harder to find, some agents say.
“There is a big hole in the market where there is not enough inventory,” said Kim Bondurant, a realtor with RE/MAX Around Atlanta. “But there is a ton of inventory above about $1.25 million.”
That could be one of the reasons why young people are not homebuyers in the same proportions as previous generations were, she said.
Cooke figured he could probably afford a price tag of about $250,000 when he started looking for a house, he said.
That price point and his desire to stay intown landed him in a two-bedroom condo off Briarcliff Road in Virginia Highland.
“I am not just rationalizing. I am a single guy. I don’t need a house. The costs are lower, the repairs are fewer and the environmental impact is less,” he said.
For the past two years or so, metro home prices have risen while inventory, or the supply of homes on the market, has remained stubbornly below historical norms.
Bondurant said most of the inventory is among higher-priced large homes in the suburbs and higher-priced smaller homes intown.
That and other factors are pushing people to consider less space.
“I think across the board, people are looking for smaller houses,” she said. “They see how big places have higher utility bills and expensive swimming pools.”
Some of this is demography: boomers are at or nearing the end of their careers. Many are ready to downsize, and younger people are not replacing all of them, Bondurant said.
She doesn’t see the market rebalancing soon. Moreover, the low inventory keeps pushing up prices, which further undercuts the allure of being a homeowner, she said.
“The trend is that home prices are increasing much faster than incomes.”
Before the burst
Before the bubble burst, when large mortgages were easy to come by, a lot of large homes were built. And easy money made move-ups appealing.
“The trends before 2007 were just so grandiose – the finishings, the huge homes – people wanted to build almost as much house as you could fit on the lot,” said Nancy Harris Keenan, a Realtor with Keller Williams.
The bubble’s burst altered the way that some people view housing, she said.
“People are paring down their square footage. The first thing a lot of people say to me is, ‘We really don’t need a lot.’ It is a totally different vocabulary.”
Builders are acutely aware of the changes, said Terry Russell, chief executive of FrontDoor Communities, which expects to close on nearly 90 homes in metro Atlanta this year.
There’s still a market for larger homes, but some people who could bigger, want something different — more convenient, more manageable. So the push is in two directions at once, size-wise.
The shift usually doesn’t mean that the downsizing buyers are paying less for housing, he said. “They will trade square-footage for quality. They are not looking for cheaper. It isn’t a less expensive home, but it’s a smaller footprint and maybe fewer bedrooms.”
And it doesn’t mean that bigger homes aren’t being built. Get farther out of town and many new homes are still large, he added. Indeed, the share of newly built homes with more than 3,000 square feet rose to 34 percent across the South in 2015, up from 24 percent in 2010, according to Census Bureau data.
Starter homes rare
As that trend suggests, fewer builders these days are catering to first-time homebuyers who fueled the bubble with purchases of 2,000 to 3,000-square foot homes in the suburbs.
“There are just not as many starter homes as there used to be,” Russell said.
Recent estimates are that the number of homes for sale represent only about three months of sales – about half of a healthy balance. That’s a seller’s market – a time when buyers bid for homes and sellers should get close to, or sometimes more, than what they ask.
But like everything in real estate, it’s all about location, Keenan said.
“In the area we focus on – that’s Atlanta, Buckhead and Sandy Springs – there were 338 homes in the $250,000 to $400,000 range, 45 are under contract and they were on the market an average of 32 days.”
About the same number were listed between $1 million and $1.5 million. Just 24 are under contract – and they had been on the market an average of 80 days, Keenan said. “That is a long freakin’ time.”
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