As household spending and income adapt to meet the needs of today's economic conditions, new single-family home have followed suite. In a surprise divergence from recent trends, homes seem to be on a growth spurt again.
This data is surprising considering that many potential homebuyers have been sidelined by high unemployment and weak economic growth. Fed Chairman Ben Bernanke spoke recently about the slow economic recovery at the 2012 National Association of Homebuilders International Builders' Show in Orlando, Florida.According to the latest Census Bureau data homes for the first half of 2011 new home being built were following this surprising trend. Data found that in comparison to 2010 the average size of homes grew along with the number of four+ bedroom homes.
He noted that "although some progress has been made in reversing the losses in jobs and income sustained during the recession, the pace of expansion has been frustratingly slow and the unemployment rate remains very high by historical standards. The state of the housing sector has been a key impediment to a faster recovery."
Does this Census Bureau data mean we are on the road back to McMansions? The NAHB is asking the same questions, "These facts lead to an interesting question: how can the average home be getting bigger, more expensive, and have more amenities when the housing market remains weak and the overall economy is yet to see a robust recovery?"
They key difference in these early 2011 findings is who is building homes as well as the number of new housing starts. There were only 429,000 new housing starts in the first half of last year.
Because of recent crackdown on mortgage lending, many would-be buyers of new homes are instead waiting on the sidelines. Today's buyers need excellent credit as well as at least 20 percent to put down. This has changed the pool of buyers and these buyers are building bigger.
Other key findings of the study were as follows:
- Average size rose to 2,522 square feet, up 6% from 2,381 square feet in 2010.
- The share with 4 or more bedrooms rose to 42%, up from 36% in 2010.
- The share with 3 full bathrooms or more jumped to 28%, up from 23% in 2010.
- The share with a finished basement jumped to 30%, up from 25% in 2010 (basement counts towards total square footage only if finished by the builder).
- The share with a 3-car garage or more reversed a six year trend, rising to 18% from 16% in 2010.
- The average sales price of homes started for-sale rose to $274,400, up from $264,900 in 2010.
To ensure more new housing starts hit the market in 2012, however, changes need to be made. Bernanke notes, "The weak housing market also impairs homeowners' financial health and diminishes the quality and stability of neighborhoods and communities. For these reasons, and because the troubled housing market depresses construction activity and employment, we need to continue to develop and implement policies that will help the housing sector get back on its feet."
Keep tuned to find out about the latest policy changes has coming your way and how these could affect single-family housing across the nation.
Carla Hill Realtytimes.com March 28, 2012