There’s no arguing it, affordability for a Boston home is still tight. And if you’re trying to buy a home, that may mean you need to look at smaller houses to find one that’s still in your budget. But there is a silver lining: builders are focused on building these smaller homes right now and they’re offering incentives. And that can help give you more options that fit the bill.

Newly Built Homes Are Trending Smaller

During the pandemic, homebuyers wanted (and could afford) larger homes – and builders delivered. They focused on homes that were bigger, so people had more space for things like working from home, having a home gym, bonus rooms for virtual school, and more.

But with the affordability challenges buyers are facing today, builders are increasingly shifting their attention to bringing smaller single-family homes to the market. The graph below uses data from the Census to show how this trend has evolved over the last few years:

So, why the shift to less square footage? It’s simple. Builders want to build what they know will sell. Basically, they focus on where the demand is strongest. And once mortgage rates started climbing and consumers felt the challenges of affordability creeping in, it became clear there was (and is) a very real need for smaller homes. As the National Association of Home Builders (NAHB) explains:

“After a brief increase during the post-covid building boom, home size is trending lower and will likely continue to do so as housing affordability remains constrained.”

A recent article in the Real Deal says this about how this helps buyers:

“Even a slightly smaller home can be thousands of dollars cheaper — for both builders and buyers. . . In response to affordability challenges, major homebuilders are shifting priorities away from the big ticket homes and towards the cheaper set.”

What This Means for You as a Homebuyer

If you’re having a hard time finding something in your budget, it may help to look at smaller homes. And, if you consider new builds specifically, you may find a few other fringe benefits that can help on the affordability front – like price reductions or mortgage rate buy-downs. As NAHB says:

“More than one-third of builders cut home prices in 2023. NAHB expects builders to continue offering smaller homes and more affordable designs as housing affordability remains a barrier to homeownership.”

As Charlie Bilello, Chief Market Strategist, at Creative Planning, explains:

“Homebuilders are adapting to the lowest affordability on record by building smaller homes and offering more incentives/price cuts. The median square footage of a new single-family home in the US has moved down to its lowest level since 2010.”

If you explore these options, you’ll also get brand new everything, enjoy a house with fewer maintenance needs, and some of the latest features available. That’s worth looking into, right?

Boston Homes and the Bottom Line

Builders building smaller homes can give you more affordable options at a time when you may really need it. If you’re hoping to buy a home soon, let’s connect to look at what’s available in our area.

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Boston condo and single-family homes sales

Home sizes in the U.S. increased in 2021 amid pandemic-related desire for more space, but according to new data from the National Association of Homebuilders (NAHB), today’s homes are trending much smaller.

The median area for a new single-family home fell to 2,191 square feet in the second quarter — the lowest recorded size since 2010. The average area, meanwhile, dropped to 2,415 square feet.

“Home size is trending lower and will likely continue to do so as housing affordability remains constrained,” NAHB Chief Economist Robert Dietz said in the report.

The median and average size of a new-home rose in the wake of the Great Recession, peaking at about 2,700 and 2,500 square feet, respectively, in 2015, before shrinking steadily until the pandemic sparked a need for extra space among homeowners in 2020.

Updated: Boston Real Estate Blog -2023

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Boston condo and single-family homes sales

Boston home sales fell 8.8% year over year and rose 26% month over month in May, while nationwide, sales fell 8.5% annually and rose 5.8% monthly, as rising interest rates and home prices weighed on homebuyers’ purchasing power, RE/MAX said in its National Housing Report.

The average close-to-list-price ratio of the 51 metro areas surveyed was 103.3%, down 0.2% from last month but up 1.6% from last year. The ratio represents the average value of the sales price divided by list price, and any number over 100% means the home sold for more than asking.

Homes Number of Day’s-on-market

The average days on market totaled 23, down three days from April and two days from a year earlier.

The number of homes for sale in May rose 16.3% month over month and 2.2% year over year. Months’ supply of inventory rose to 0.9 from 0.8 in April and fell from 1 in May 2021.

Home Sales Decline

“A decline in home sales isn’t entirely unexpected given the higher mortgage-rate environment, but the gains in inventory are welcome news for buyers who are now starting to see a few more listings come onto the market during their home search,” RE/MAX President and CEO Nick Bailey said in a press release. “Affordability remains a concern, but homebuyers are regaining some control, which has been long overdue.”

Updated: Boston Real Estate Blog 2022

Click Here to view: Google Ford Realty Inc Reviews

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Boston condo and single-family homes sales

Boston real estate prices year-over-year increased by 7.9%

Home prices continue to soar all over the United States, seeing double-digit annual growth for the third month in a row.

According to the latest CoreLogic Home Price Index report released on Tuesday, home prices increased 13 percent year over year and 2.1 percent monthly in April. This number is the highest it’s been since February 2006 and marks the third month in a row that home prices have seen double-digit annual increases.

Such high appreciation comes amid record-low mortgage rates coupled with a nationwide inventory shortage. Although great for homeowners, the current situation is making it extremely difficult for first-time and young buyers without family help to break into the market.

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CoreLogic

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CoreLogic

“Baby boomers are staying in their homes longer, slowing the pace with which existing homes come on the for-sale market,” Dr. Frank Nothaft, chief economist at CoreLogic, said in a statement. “Owner occupants today have been in their homes for a median of 13 years, about 50% longer than the previous generation.”

Boston Condos and Real Estate for Sale

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Boston condo and single-family homes sales

City of Boston Real Estate Sales Summer 2020

The median selling price for a single-family home rose 8.9 percent, from $660,000 in June 2019 to $718,500 in June 2020.

Boston Condo Sales

Condo prices went down 7.7 percent, from $704,016 in June 2019 to $649,500 in June 2020.

Boston Real Estate Inventory

Single-family homes spent an average of 25 days on the market. For condos, it was 38.

Active Boston Real Estate Listings

The number of active single-family listings was down 10.8 percent, while the number of condos on the market rose 8.4 percent. The number of single-family homes that sold plummeted 44.4 percent, while the number of condos that changed hands decreased 39.1 percent.