The long, deep recession of the past several years has taken a harsh toll on the nation's home building industry at every level, even influencing the types of houses that are built and the features consumers are willing to purchase. As the industry stumbles back toward better health, some of the features and amenities popular during the boom years will regain their popularity, but some recent trends likely are here to stay.
In particular, homes with smaller footprints are projected to remain popular among consumers, according to a recent study by the NAHB. The organization scrutinized census data collected from 2005 to 2009 on the characteristics of new homes started in that period to identify trends. The most significant change in home features has been the median size of single-family homes. In 2006, the median size of single-family homes peaked at 2,268 square feet, but in 2007 houses began to shrink. Median square footage has continued to decline since then, dropping to 2,100 square feet in 2009.
According to Paul Emrath, vice president for survey and housing policy research and author of the NAHB's "Characteristics of Single-Family Homes Started in 2009" report, past declines of this significance in median square footage occurred during the recession of the early 1980s. Home sizes eventually grew as the economy recovered from that period. Currently, tightened lending standards and lower equity in existing homes mean consumers can afford less, and many have learned that purchasing a home—while still a decent long-term investment—is not a guaranteed money-maker.
But while the current trend for smaller homes partially may be driven by economic troubles, one of the main reasons consumers are interested in less square footage is their concern about high energy costs—and that is unlikely to change, the report notes. An appreciation for the inherent energy-saving qualities of smaller homes had started to emerge even before the housing market went bust and dragged the economy down with it.
Production homes are not the only ones to experience shrinkage in response to new consumer mindsets, either. The median size of contractor-built homes—typically the largest on average—declined, as well, even as this segment's share of construction increased from 11.4 percent in 2005 to 18.6 percent in 2009. Owner-built homes have remained relatively stable, starting at 7.5 percent of the market in 2005, rising to 12 percent in 2008 and then slipping to 11.4 percent in 2009. In 2007 and 2008, more than 9 percent of the homes started were 4,000 square feet or larger; but in 2009, that number slid to 7.3 percent.
Many of the features homeowners require—such as number of bedrooms—haven't experienced significant declines during the recession, despite smaller square footages, but luxury amenities are another story, according to the NAHB's report.