Smaller is Better in a Post Housing Bubble Era

This is not just accidental.  Now loan underwriting is going back to pre-2000 standards.  Now, your income must qualify you for a standard loan and not a affordability product.  A bigger new house cost more to build, so builders are just making homes based on what people can afford.

"A new housing market is emerging, and even with the recession in the rear view mirror we expect the popularity of smaller homes to persist," said Bob Jones, chairman of NAHB and a home builder from Bloomfield Hills, Mich. "Builders are responding to a new mindset among home buyers that has been shaped not just by a weak economy, and it is transforming the product they deliver."

The current decline in home size can be attributed to factors like the desire to keep energy costs down, the amount of equity in existing homes available to be rolled over into new ones, tighter credit standards, less interest in buying a home as an investment and a growing presence of first-time buyers.

"While the Census Bureau shows characteristics for new homes that have been completed in a given year, we decided to tabulate the characteristics for the homes that were started," said Paul Emrath, the report's author and NAHB's vice president for survey and housing policy research. "This eliminates several months of lag time while the home is being constructed and can provide a more current picture of the marketplace, which has been changing rapidly."

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