Why Are New Homes Getting So Big? Look at Who's Buying Them
Preliminary data provided to NAHB by the Census Bureau on the characteristics of homes started in 2013 show the trend toward larger homes continued unabated last year, as did the share of new homes with 4+ bedrooms, 3+ full baths, 2-stories, or 3-car garages. The average size of new homes started in 2013 was 2,679 square feet, about 150 square feet larger than in 2012 and the fourth consecutive annual increase since bottoming out at 2,362 square feet in 2009.
New homes started in 2013 were also more likely to have additional features: nearly half, 48 percent, had 4 or more bedrooms; 35 percent had 3 or more full bathrooms; 22 percent had a garage for at least 3 cars; and 60 percent were 2-stories. The share of new homes started with these features has been increasing consistently for 3 or 4 years, and the most obvious question is “why?” Why are homes getting this BIG?
To get an answer, just take a look at WHO is buying new homes. The typical new home buyer in recent years has been someone with strong credit scores and high levels of income. To the first point, the average credit rating of all US consumers has remained rather flat over the last few years, while the average credit rating of mortgage borrowers took a dramatic jump after 2007. By 2013, the gap between the two measures was 58 points, compared to 33 points in the early 2000s.
To the second point, there has been a rising trend in new home buyers’ income in recent years. In 2005, the median income of new home buyers was $91,768. By 2011, it had increased by more than 17 percent to $107,607. It is not too surprising, therefore, to see home size and features continuing to trend upward, given that those buying new homes are precisely the kind of buyers who generally purchase large, feature-loaded homes.
View this original post on the NAHB blog, Eye on Housing.