Is Affordability Improving? Buying a Home Can Still Be Tough: Here’s Some Good News

While affordability is getting better, buying a home can still feel challenging for many. But there’s some good news: builders are now focusing on constructing smaller homes and offering key incentives to buyers. These two trends can be a big help if you’re concerned about finding a home that fits your budget.

Builders Are Focusing on Smaller Homes

During the pandemic, many homebuyers were looking for larger homes, and with increased buying power, they could afford them. Builders responded by creating bigger spaces to accommodate needs like working from home, setting up home gyms, and having extra rooms for virtual schooling.

Now, as affordability tightens, builders are shifting their focus to smaller single-family homes. Data from the Census shows a significant trend towards smaller new homes over the past few years.

But why are builders choosing to build smaller homes right now? At the end of the day, builders want to meet current market demand—they build what they know will sell. Right now, the number one thing homebuyers are looking for is better affordability. Since smaller homes typically come with smaller price tags, both buyers and builders have turned their attention to homes with less square footage. The National Association of Home Builders (NAHB) reports:

“. . . home buyers are looking for homes around 2,070 square feet, compared to 2,260 20 years ago.”

And according to Orphe Divounguy, Senior Economist at Zillow:

“Not only are cash-strapped buyers continually seeking out lower-cost options, but developers are changing what type and size of home they’re producing to try and meet that need.”

How a Newly Built Home Can Help You Achieve Your Homebuying Goals

If you’re having a hard time finding something within your budget, it might be time to look at brand-new homes with a smaller footprint. When you do, you might find additional benefits that can help with affordability—like price reductions or mortgage rate buy-downs.

According to the latest data from Zonda, more than half of builders are offering incentives, some of which include mortgage rate buy-downs. These perks could help lower your future monthly housing payments. John Burns, CEO of John Burns Research & Consulting, explains:

“The monthly payment matters more than anything else and builders have responded with smaller, more efficient homes.”

Plus, with new home construction, you get brand-new everything, fewer maintenance needs, and some of the latest features available. That’s definitely worth considering, right?

Bottom Line

With builders focusing on smaller homes, you have more budget-friendly options when it matters most. If you’re thinking about buying a home soon, work with a local real estate agent to see what’s available in the area where you want to live. At William Gartin Real Estate, we’re here to help you find the perfect home that fits your needs and budget. Contact us today to start your search!