Builders Are Building Smaller Homes

There’s no arguing it, affordability 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 SmallerDuring 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 YouIf 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? Bottom LineBuilders building smaller homes can give you more affordable options at a time when you really need it. If you’re hoping to buy a home soon, partner with a local real estate agent to find out what’s available in your area.

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Should I Move with Today’s Mortgage Rates?

When mortgage rates spiked up over the last few years, some homeowners put their plans to move on pause. Maybe you did too because you didn’t want to sell and take on a higher mortgage rate for your next home. But is that still the right strategy for you?In today’s market, data shows more homeowners are getting used to where rates are and thinking it may be time to move. As Mark Zandi, Chief Economist at Moody’s Analytics, explains:“Listings are up a bit as life events and job changes are putting increasing pressure on locked-in homeowners to sell their homes. Homeowners may also be slowly coming to the realization that mortgage rates aren’t going back anywhere near the rate on their existing mortgage.”A recent study from Bank of America sheds light on some of the things homeowners say would make them sell, even with rates where they are right now (see visual below):What Would Motivate You To Move?Now that you know why other people would move, take a minute to think about what would make a move worth it for you. Is it time to take a chance and go for your dream job, even though it’s not local? Are you looking for a neighborhood that has more to offer and a close-knit sense of community? Maybe you just need more space, you’re looking for your next great adventure, or you want a house that opens up rental opportunities to pad your income.And here’s something else to consider. Mortgage rates are still expected to go down over the course of the year. And once that happens, there’s going to be a big rush of buyers jumping back into the market. While you could delay your plans until rates drop, you’ll only have more competition with those buyers if you do.So, does that mean it’s worth it to move now, even with rates where they are? The answer is: that it depends. You'll want to consider today’s mortgage rates, where they’re expected to go from here, and what would prompt you to want to make a change as you decide on your next steps. An expert can help with that. Bottom LineOther homeowners are getting used to rates and deciding to move. Talk to a local real estate agent to go over what matters most to you and if it’s time for you to jump back into the market too. 

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Don’t Let Your Student Loans Delay Your Homeownership Plans

If you have student loans and want to buy a home, you might have questions about how your debt affects your plans. Do you have to wait until you’ve paid off those loans before you can buy your first home? Or is it possible you could still qualify for a home loan even with that debt? Here’s a look at the latest information so you have the answers you need.A Bankrate article explains:“Roughly 60 percent of U.S. adults who have held student loan debt have put off making important financial decisions due to that debt . . . For Gen Z and millennial borrowers alone, that number rises to 70 percent.”This includes one of the biggest financial decisions you’ll ever make, buying a home. But you should know, even with student loans, waiting to buy a home may not be necessary. While everyone’s situation is unique, your goal may be more within your reach than you realize. Here’s why. Can You Qualify for a Home Loan if You Have Student Loans?According to an annual report from the National Association of Realtors (NAR), 38% of first-time buyers had student loan debt and the typical amount was $30,000.That means other people in a similar situation were able to qualify for and buy a home even though they also had student loans. And you may be able to do the same, especially if you have a steady source of income. As an article from Bankrate says:“. . . you can have student loans and a mortgage at the same time. . . . If you have student loans and want a mortgage, there are multiple home loan programs you might qualify for . . .”The key takeaway is, for many people, homeownership is achievable even with student loans. You don’t have to figure this out on your own. The best way to make a decision about your goals and next steps is to talk to the professionals. A trusted lender can walk you through your options based on your situation, and share what’s worked for other buyers.Bottom LineLots of other people with student loan debt are able to buy their own homes. Talk to a lender to go over your options and see how close you are to reaching your goal.

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