There is so much in the news of late that I really don’t know where to start today. There are so many hot topics I could discuss below. There’s the unprecedented media attacks on President Trump; the Obamacare repeal and replace issue; the economy which is in flux; the upcoming Fed meeting next week and a likely rate hike; just to name a few. I could go on and on.
Yet most of you are likely aware of these major issues in the media today, and I like to focus on topics that maybe you haven’t seen in the media, and give you my take on what they mean. So today I will focus on a trend we’re seeing in the housing market that you probably haven’t heard about.
The American Dream of owning your own home remains firmly intact. But according to a new study, more Americans would rather downsize their home, if they were going to move today, than buy a bigger house. This has never happened since records have been kept.
While American homes continue to grow larger in size, and higher in price, many people say if they decided to move today, they’d want to downsize. More homeowners would rather have a smaller house than a larger one, according to a new report from Trulia, a real estate firm in Dallas.
Trulia’s latest survey of homeowners found the following surprising results:
- Most Americans aren’t satisfied with their current home size. Less than a third
(32%) would choose a home the same size as the one they’re currently living in
if they decided to move in the next year.
- Bigger homes are not always the key to satisfaction. Of those currently living in
homes larger than 2,000 square feet, more would choose a smaller home than the
one they’re living in than a larger one, if they decide to move this year (60.6% vs. 39.4%).
- Age matters. Many more Baby Boomers (ages 55+) want to downsize rather than upsize (36% vs. 23%), while and most Millennials (ages 18 to 34) still want to go
Let that sink in. Over 60% of larger homeowners would choose a smaller house if they were to move in the next year. Maybe that’s not so surprising: If you’re younger, you probably want a bigger house; if you’re older, maybe you are looking to downsize.
Yet the new Trulia survey found that more than six out of 10 of people living in large homes of 2,000 square feet or more said they’d rather pick a smaller home next time around. That is a huge number and speaks volumes for future housing trends.
Older Americans, more of whom are homeowners, are now more likely to want to downsize than younger Millennials. Some 37% of Baby Boomers said they plan to move at some point before too long, and 42% of that number said they would prefer to live in a smaller home. That’s the highest number on record.
So what does all this mean, and why do I find this trend interesting enough to write about today? Well, because for most of our lifetimes, the American Dream has meant being successful enough to buy larger and larger houses. Even people in their 50s and 60s were traditionally looking to buy a larger house in many cases.
Part of the reason is that real estate was looked upon as a good investment, and owning a larger house was considered a status symbol. Yet in the wake of the financial crisis of late 2007-early 2009, when real estate prices imploded, all that is changing.
Small homes are gaining in popularity, and are showcased on television programs like HGTV’s “Tiny House Hunters,” which pairs people with homes of about 600 square feet. Small homes can also offer homeowners big and fast returns, likely due to increased demand and proximity to city centers. Smaller homes can be the right move for retirees, too, what with the lower costs in building, maintaining, utilities and property taxes.
And the number of townhouses being built – often closer to public transport, smaller and less expensive than detached homes – also increased by nearly 13% last year alone. Apartment construction is exploding as well.
The bottom line is that older Americans are downsizing their homes at a record rate. Is this a good thing or a bad thing? Time will tell. One way or the other, it will be interesting to watch. I’ll keep you posted.
What about you? Are you thinking of downsizing or do you have your sights set on a larger home?