Get Ready for Smaller, More Affordable Homes

“Are you in the market for a new home but finding yourself constrained by the surge in mortgage rates and soaring property prices? If so, there’s promising news on the horizon, according to Ali Wolf, Chief Economist at Zonda. She predicts that we can anticipate a significant increase in the availability of entry-level homes over the next 12 to 24 months.

In some respects, smaller, more affordable homes are already becoming more prevalent. The onset of the pandemic brought about a fundamental shift in how people view their homes. Suddenly, homes needed to serve not only as living spaces but also as workstations, schools, gyms, and more. Those fortunate enough to have spacious homes found themselves in a position to fully utilize their space for these purposes. Meanwhile, individuals with smaller homes often found themselves seeking to upgrade to larger ones. Consequently, the homes hitting the market during the pandemic tended to be smaller than those available before the pandemic.” This revision maintains the core information while making the content flow more smoothly and clearly.

“This graph also illustrates the seasonal fluctuations in home sizes entering the market. Typically, larger homes tend to become available during the summer months, a period when families with school-age children often seek to make their move.

Given these historical trends and the approaching fall season, we can anticipate an increase in the availability of smaller, more affordable homes for the remainder of the year. This is especially encouraging news, considering the recent observations made by Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), regarding the growing demand for such homes. As interest rates rose in 2022 and housing affordability became more challenging, there has been a notable trend towards smaller home sizes.

So, what does all of this mean for you? The combination of the seasonal trend of smaller homes entering the market in the latter part of the year, along with builders actively introducing smaller, more affordable newly constructed homes, bodes well for those who are struggling to find affordable housing options. Mikaela Arroyo, Director of the New Home Trends Institute at John Burns Real Estate Consulting, underscores this point by highlighting that while this may not entirely solve the affordability crisis, it does create opportunities for individuals to access entry-level homes in their desired areas.

In summary, if the prospect of a smaller, more affordable home appeals to you, the good news is that such options are on the horizon. To stay informed about what’s available in your specific area, we recommend connecting with a local real estate agent.”