My Two Cents

Jan 15 2009 7:26AM | Permalink | Email this | Comments (1) |
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By Susan Bady

New homes are shrinking! I've heard that one before and always regarded such pronouncements with skepticism, but this time, the shrinkage appears to be significant. NAHB says that homes started in the third quarter of 2008 averaged 2,438 square feet, down from 2,629 square feet in the second quarter. NAHB's director of research, Gopal Ahluwalia, says there have been slight decreases before, but this latest drop is much steeper and is likely to hold even after the economy recovers. In an NAHB survey this month, 89% of builders said they were building or planning to build smaller homes than before.

Of course affordability is a driver, but Kermit Baker, chief economist for the American Institute of Architects, says even buyers of luxury homes are more interested in smaller, better-built homes. Custom home builders, what say you?