Have you been trying tobuy a home, but highermortgage ratesandhome pricesare limiting your options? If so, heres some good news based on what Ali Wolf, Chief Economist atZonda, has tosay smaller, more affordable homes are on the way:
Buyers should expect that over the next 12 to 24 monthsthere will be a notable increase in the number of entry-level homes available.
In some ways,smaller homesare already here. When the pandemic hit, the meaning of home changed. People needed the space their home provided not only as a place to live, but as a place to work, go to school, exercise, and more. Those who had that space were more likely to keep it. And those that didnt were in a position where they were trying to sell their smaller house to move up to a larger one. That meant the homes coming to the market during the pandemic were smaller than those on the market before the pandemic and that trend continues today (see graph below):
This graph alsoshowshow the size of homes on the market changes seasonally. Larger homes tend to come on the market during the summer months when households with children who are out of school are looking to move.
That seasonality means, based on historical trends and the fact that fall is now approaching, we can expect smaller, more affordable homes to come to the market throughout the rest of the year.
Thats great news because, as Robert Dietz, Chief Economist at theNational Association of Home Builders(NAHB),states, the need for these types of homes has gone up recently:
. . . as interest rates increased in 2022, and housing affordability worsened,the demand for home size has trended lower.
What Does This Mean for You?
The seasonal trend of smaller homes coming to the market in the later months of the year, coupled with buildersbringingsmaller, more affordable newly built homes to the market right now, is good news especially if youre finding it difficult to afford a home. Mikaela Arroyo, Director of theNew Home Trends InstituteatJohn Burns Real Estate Consulting,saysthis about a potential increase in the availability of smaller homes:
Its not solving the affordability crisis, butit is creating opportunities for people to be able to afford an entry-level homein an area.
Bottom Line
If a smaller, more affordable home sounds appealing to you, good news theyre coming. To keep up with whats available in our area, connect with a Seven Gables Advisor.
