Aug072015

Tiny house movement loses ground to McMansions

With the disappearance of the entry-level buyer, builders aren’t building small, entry-level homes, so the average size of new homes keeps rising.

cozy houseThe entry-level buyer utilizing only their savings plus a loan is the foundation of the housing market. If you follow the chain of move ups backward, it eventually leads to the entry-level buyer, and as a result, nobody in the real estate market gains move-up equity until the entry-level buyer does. If owners of entry-level properties do not gain equity over time due to price declines or stagnation, they do not have the equity necessary to move up, and neither will any other seller in the move-up equity chain.

If the first-time buyer disappears from the market, which they did since the housing bubble burst, then more sales occur in the higher-priced move-up market, a market dominated by larger homes, making aggregate home sizes larger. This trend has been playing out over the last several years as house sizes have consistently gotten larger despite the “tiny house” movement away from larger homes.cozy_realtor

The Recovery Is Super-Sizing Houses

Square footage is growing faster now than it did during the housing boom, but the culture of the McMansion may be changing.

Kriston Capps, Aug 3, 2015

The housing crisis may have wiped out Lehman Brothers, Iceland, and the credit of home buyers across the nation. But it didn’t put a dent in the McMansion.

Oh, for sure, the average size of new single-family houses dipped a bit between 2007 and 2009. After ticking up slowly over the course of the 1990s and ramping up a bit more quickly in the first half of the 2000s, the party came to a halt in 2008, when the average square feet of new homes fell 3 square feet.

But the bounce is back. Between 2010 and 2011, the average size of new houses grew from 2,392 square feet to 2,480 square feet—the biggest push since the late 1980s, according to Census data. Last year, the mean square footage for a new U.S. home crested 2,600 square feet for the first time. Median square footage is rising the same way. The trend is being driven by a surge in the construction of ginormous houses.

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In 2014, 12 percent of all new single-family homes built in the U.S. were more than 4,000 square feet in floor area. There were three times as many homes built in the 3,000-3,999 square feet range as there were homes under 1,400 square feet. The recovery is being super-sized.

So why are builders providing such large houses? Mostly, it’s a matter of practicality: high wage earners have the cash and credit score to close the deal, and today entry-level buyers, mostly Millennials, don’t have the cash, the credit score, or the savings to buy a house; thus small houses aren’t selling and large houses are.PREFAB-ABANDONED

“Coming out of the recession, a lot of builders were stuck with a lot of developable lots that they were going to develop as the housing construction was booming,” says Selma Hepp, chief economist at Trulia. “After the recession, instead of building what they were building up to that point, they started building larger homes to capitalize on those developable lots.” …

Hepp says the luxury market led construction for new houses during the recovery, so that’s part of it. Wealthy or international buyers who could still acquire mortgages or pay with cash in the aftermath of the credit collapse may have spurred builders to make larger houses. But land scarcity is probably the largest factor.

“Today, we have such a scarcity of lots, [builders] are trying to maximize their profits on the lots that they have available,” Hepp says. …

Drive around Irvine or South County and examples of McMansions on tiny lots abound. Builders provide this product because consumers demand it, and the main consumer group demanding houses is high wage earners who can afford large ones.

The supersizing of houses is in direct opposition to the tiny house movement, people dedicated to living in small houses.

DEAR PEOPLE WHO LIVE IN FANCY TINY HOUSES

Do you ever wake up wondering, “I’ve made a huge mistake?

Dear People Who Live in Fancy Tiny Houses…

Do you actually love living in a fancy tiny house*?cozy

You look so freakin’ happy in that Dwell Magazine article or Buzzfeed post, but c’mon, you can’t tell me that you don’t lie awake at night, your face four inches from the ceiling because the only place your bed fits is above the kitchen sink which also acts as your shower, and think, I’ve made a terrible mistake.

Look, I’m not criticizing you. I commend you for making this giant leap. Since we humans seem comfortable with pillaging Mother Earth of all her resources, I believe more people should think like you. But 250 square feet? What the hell happens when your tiny house partner farts Mexican food farts, huh? Where do you escape to? Nowhere.

You have nowhere to run. All you can do is walk three feet to the other end of the house and pray.

Or maybe you can run out into the tiny forest surrounding your tiny house.

I f’ing love the idea of downsizing and living a “simple life,” but seriously, where do you put your shit?

I moved into a 1,500 SF house a year ago, embracing many of the ideals of a tiny house. I don’t have many possessions, so storing the few items I do value wasn’t a major concern. Although I’ve enjoyed living with only what I need, I am moving to a much larger house at the end of the month. The tiny home has its virtues, but the opulence of space has its appeal and its rewards. The McMansion isn’t going away any time soon.

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