We all know home prices are rising. In fact, prices rose 19.5% year-over-year in September, according to the S&P CoreLogic Case-Shiller Home Price Index.¹ But did you know that for the first time in six years, home sizes are also rising?
Over 20 years (the scope of our analysis), homes have grown about 15%, but the growth has not been steady. In 2001, the size of the average new single-family home stood at 2,324 square feet, per data from the U.S. Census Bureau, while in 2020 the square footage increased to 2,480. A big dip came with the Great Recession, but home size was growing again by late 2010, then dropped off in 2015.Get Free Quotes
Today, home size is trending upward for the first time in six years. From 2015 to 2020, homes steadily shrank from about 2,700 square feet to 2,500, to use round numbers. The National Association of Home Builders (NAHB) attributed the decline to the fact that more starter homes were developed during those years.
Ready to buy or refi? Let Lendgo find your lowest rate.
"Going forward we expect home size to increase again, given a shift in consumer preferences for space due to the increased use and roles of homes (for work, for study) in the post–Covid-19 environment," wrote Robert Dietz at the NAHB.
We wondered how many homeowners and homebuyers changed their preferences over the past 20 months and whether this was related to growing home sizes. Would we look for different features the next time? Do we want to renovate to get something now that we didn't think was important before? In this story we describe how people are using the extra space in bigger homes.
Offices for Everyone!
Regular viewers of the hit HGTV show Love It or List It might have noticed a trend emerge in 2020: people requesting a specific number of offices, not just bedrooms and bathrooms.
"Office" was no longer the fallback way to use an awkward, out-of-the-way space that could not be turned to any better purpose, like a second-floor landing or a corner of a finished basement. Now buyers set out looking for office space. And not just one, but separate offices for Dad and Mom, thank you, with a window (that rules out the basement) and a door for better web conferences (so forget about the second-floor landing).
Adding ambiguity to many surveys, some homebuyers avoid the word office but increase the number of bedrooms they look for with the intention of devoting one or more to work. The pandemic greatly increased America's population of teleworkers, and we learned that trying to work at the dining room table or on a small desk in the corner of a cramped bedroom got old really fast. More and more now, people ask for office space outright rather than hoping that after they set up their whole household there will be leftover space somewhere for a desk.
The National Association of Realtors (NAR) surveyed its members in mid-2020 regarding any changes they saw in buyer preferences as a result of the pandemic. "About one in eight (13%) reported that buyers changed at least one home feature that’s important to them. The features these buyers wanted the most were home offices, yard space for exercising or growing food, and space to accommodate family."
Did the Pandemic Change What We Want?
Yes, according to the NAR survey we just mentioned, and there are other perspectives too. The NAHB tracks consumer preferences and publishes an annual report. The 2021 edition was compiled in the midst of the Covid-19 pandemic. Rose Quint, NAHB’s assistant vice president for survey research, said, "Few events over the last century have had as profound an impact on our economy and society as this health crisis, when homes became the first line of defense for many Americans, as they sheltered in place in an effort to avoid contagion."
One out of five (21%) respondents said the pandemic made them want a larger home. Among those who live with at least one teleworker or one student learning remotely, 43% said their home preferences had changed.
Quint wrote, "The home was suddenly catapulted into a new level of prominence; its purpose often expanding beyond just a functional dwelling to many other nontraditional roles, such as office, gym, or school. In response, the study introduced questions aimed specifically at measuring the impact of the crisis on home buyer preferences."
A cash-out refi can make people love their home again
Most buyers in the study (67%) said that the pandemic didn't change what they wanted in a home or community, but 25% did acknowledge the health crisis affected their housing preferences.
Staying In, Working Out
One consistently popular way to use the space in a bigger home, or the yard behind it, is exercise. Exercise rooms have been growing in popularity since the first year the NAHB tracked it; 27% of buyers wanted home gyms in 2003, and 47% want them today.
"While only 47% of buyers overall want an exercise room, cross-sectional analysis shows that a majority of buyers in certain demographic groups are interested in this room," wrote the HAHB. Those demos:
- Millennials, 61%
- Gen Xers: 62%
- Buyers paying $500,000 or more, 67%
Fitness-minded people switched to home workouts quickly in the early days of lockdown. They had no choice; gyms were closed. In the ensuing months, video conferencing brought instructors into their homes. People could attend virtual workout classes mere steps from their own personal shower. Trainers and workout mates used to be advantages of visiting a gym.
When gyms reopened, some exercisers stayed home, having decided that the privacy and convenience of staying in to work out outweighed the camaraderie and structure of belonging to a gym.
We Must Have a Laundry Room
Used to be that a laundry room sounded like a luxury only a little more practical than a giftwrapping room. The machines could fit in the garage or in an alcove off the kitchen—who needs a whole room? Well, those who have experienced ample floor space for hampers and vast tabletops for folding clothes know the value of a laundry room.
When you own a home but would rather do your laundry at the Laundromat because it has better lighting, more space, and high tables where you can fold your clothes without straining your back, you start to want your own laundry room!
A separate laundry room tops the NAHB list of what homebuyers want. The percentage of buyers: 87%.
We all spent more time at home during the health crisis than we ever expected, so it tracks that we reevaluated our current space and how we could use more. Teleworking is a workplace revolution. More people want home offices now, and the trend in wanting exercise room has accelerated. A dedicated laundry room (not a "laundry area" but an actual room), once considered a frill, is the feature that buyers most look for today, and larger homes can accommodate one. Low mortage rates help people afford bigger homes, and builders are building them to meet demand, farther out in the suburbs where land is cheaper. These are all reasons why the steady six-year shrinking of homes ended in 2020 and homes are now growing bigger.Get Quotes Now