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Bigger Isn’t Always Better: What Today’s Buyers Are Looking For in a Home

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Bigger isn’t always better.

After the mad dash by homebuyers to purchase larger places to live in at the height of the COVID-19 pandemic, some experts are making a case for more efficiently designed, smaller homes.

With the pandemic seemingly waning, mortgage rates and home prices rising, and builders struggling to get anything up in the face of supply chain shortages, there’s a convincing argument to be made that home shoppers should consider seeking smaller houses.

A new book by Sheri Koones, “Bigger Than Tiny, Smaller Than Average,” posits that functionality is more important than square footage.

Examples of gaining extra functionality out of existing space include dining rooms that are transformed into exercise spaces or workspaces located on stair landings or in a niche behind a bookcase instead of a dedicated office.

“People want quality rather than quantity,” says Koones, who has written nine books on the subject of small houses and sustainable building. “People want spaces where they can be together.”

Not to be confused with tiny homes (400 to 600 square feet), small homes can be defined as those with 1,400 to 2,000 square feet. They can also be thought of as typical entry-level houses—more affordable homes popular with first-time buyers on limited budgets.

However, the National Association of Home Builders posted statistics showing that homes built in the past year are gaining in square footage.

That’s in contrast with about 30% of architects who work on homes for planned communities surveyed who said they were decreasing the square footage of interior rooms in 2021 residential units, according to the New Home Trends Institute by John Burns Real Estate Consulting.

“They’re removing some of what one architect calls ‘twirling room,’ the extra transition spaces [like hallways] that may not be necessary,” says Jenni Nichols, director of DesignLens, part of the institute.

Today’s buyers might want better—not bigger—homes

Through better design and improved functionality, a small home can still offer the spaces people want.

Nichols reports that architects are responding with flex spaces, repurposed areas, and efficient room sizes to increase functionality.

“People are using an expanded stair landing for an indoor bicycle or small fitness equipment. In many small home designs, the separate dining room is gone in favor of an eat-in kitchen with room for a separate table or two-tiered island with the lower portion used as a table,” Nichols says. “The bedroom niche we used to use for a dresser is now a spot for a desk. … I’ve even seen entries large enough to hang bikes.”

“Home offices do not need to be bedroom-sized,” she says. “Some interior designers are converting closets into ‘cloffices.’”

Of course, no one wants to feel cramped in their home. Koones found that functional small home design often includes high ceilings, open staircases, and well-placed windows. Open floor plans, light-colored cabinets, and wall and creative storage can make a space feel larger. And homeowners typically appreciate some access to outdoor living with a deck, patio, or small yard.

During the pandemic, Teri SlavikTsuyuki surveyed nearly 7,000 homeowners and renters. The 2020 study found the things people felt were missing from their current living situations “had to do with better design and functionality and less to do with space,” Slavik-Tsuyuki says. She is the principal of tstink, a consultancy that works with developers and homebuilders nationally to help them design homes.

Respondents wanted better-equipped kitchens, in-home technology, storage, and better home office space—but not extra rooms, says Slavik-Tsuyuki.

“What didn’t even make the top 15 [responses] was the desire for an additional room or space in their home,” Slavik-Tsuyuki says.

Smaller homes could save money for builders and buyers

Smaller homes typically, but not always, cost less to build. They often use fewer materials and can sometimes be built on smaller lots. Those much-needed savings are often passed on to buyers grappling with record-high home prices and fast-rising mortgage interest rates.

(Median home list prices were up about 14% year over year, to hit a record high of $425,000 nationally in April, according to the most recent Realtor.com® data. Meanwhile, mortgage interest rates went from 3% a year ago to 5.25% for 30-year fixed-rate loans, according to Freddie Mac data.)

Materials used in building homes cost about 23% more than they did just a year ago, according to the National Association of Home Builders. Construction worker wages are up 6%, and land prices and the loans builders need to put up new housing have also risen, according to NAHB. Plus, it’s taking longer to build as supply chain shortages are causing delays, which adds to the rising costs.

“A growing number of buyers will be priced out of the market,” says Robert Dietz, NAHB’s chief economist.

All of this would seem to point to fertile ground for growing smaller homes.

“A smaller home with the right features—a great kitchen, a cool master suite, indoor-outdoor living, for example—and a lower price, and the lower monthly payment that comes with it, would hold real appeal to buyers suffering from sticker shock and discouraged by onerous monthly mortgage payments,” says Frank Anton, former CEO of the real estate media firm Hanley Wood.

The post Bigger Isn’t Always Better: What Today’s Buyers Are Looking For in a Home appeared first on Real Estate News & Insights | realtor.com®.

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