In the wake of the housing crisis and recession, builders found the best economic strategy was to build larger, more expensive homes. Now they are having to reverse course.
Realtor.com reports that aging Baby Boomers, maturing Millennials, and people who have finally rebounded from previous foreclosures want smaller sized homes. Builders are finding cheaper land farther out from cities and constructing more homes on smaller lots. A group of townhomes is a better proposition than one big McMansion.
The change to smaller homes will be a long process for builders, who still have to face obstacles such as rising costs for land and labor, which reduce their profit margins.
There were 14.72% newly constructed homes between 1,000 and 1,499 square feet in the '90s compared with just 9.75% in the postrecession era, 2010 to 2015.
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