Builder Innovations for More Affordable Entry-Level Homes
The Great Recession is said to have set Millennials' homebuying power back a decade. Now that their financial power is on the upswing, they are entering the market in greater numbers, forcing builders to innovate at the entry-level.
Until recently, builders weren't as motivated to make affordable entry-level homes since there weren't enough new buyers who could afford them, and financing rules were tighter than before. Investors had also taken a chunk out of the available stock at this price range during the downturn to convert properties into rentals. While there is more incentive to build affordable, entry-level homes, builders are facing rising land, labor, and materials costs, the Urban Land Institute reports. Senior vice president and chief economist at Metrostudy Mark Boud says, "Builders need to move toward lower-cost, less-labor-intensive methods of building homes," like factory-built modular homes. He adds, “They can be built at various densities, and there’s lower labor cost."
Situated 12 miles (19 km) from downtown Austin, Texas, developer Brookfield Residential’s Easton Park is one of the places where the real estate industry is figuring out how to provide housing that people of modest means can afford. The 1,500-acre (607 ha) master-planned community will include some traditional three-bedroom houses on expansive lots, the sort that once fulfilled the American dream for many of the parents of today’s Millennial homebuyers. But to fit within the financial constraints faced by these first-time buyers, Brookfield also has come up with a format for a detached single-family home that is as small as 1,000 square feet (93 sq m).