Builders Are Building Smaller Homes, But Is It Enough?

Builders Are Building Smaller Homes, But Is It Enough?

In recent years, home builders have been constructing smaller houses, but these reductions may still fall short of meeting the needs of a significant portion of the population. According to a recent survey by the National Association of Home Builders (NAHB), 38 percent of builders reported building smaller houses last year, with 26 percent planning to continue this trend.

The average size of new homes built in 2023 dropped to 2,411 square feet, the smallest since 2010. This shift towards smaller homes is largely driven by ongoing affordability issues. However, a survey by real estate investment company IPX 1031 suggests that builders may need to reduce sizes even further. Nearly three-quarters of the survey's over 1,000 respondents expressed a willingness to consider living in a tiny home, typically defined as 500 square feet or less. The primary reasons for this preference were affordability, a desire for a minimalist lifestyle, and the lack of need for larger living spaces.

New Era of Catalog Homes

Older generations may recall the era when houses could be purchased directly from a Sears catalog. Over 70,000 mail-order houses were sold by the now-defunct department store chain, many of which still stand today. In a modern twist, Home Depot now offers tiny houses on its website. Their most popular model is a 444-square-foot, two-bedroom, one-bath cottage priced just over $26,000. For those needing less space, a smaller studio unit with one bath is available for about $19,000.

These tiny homes are delivered in packages that include a steel frame for assembly, while buyers need to provide a concrete slab, utility connections, and all finishing materials, including siding, roofing, exterior doors, and windows. Local building code approvals are also required.

Urban Parks and Property Prices

Living near a park is often seen as a desirable feature, particularly in urban areas where green spaces are scarce. Contrary to this belief, new research published in the Journal of Housing Economics indicates that proximity to parks can sometimes lower property values. The study, which focused on China, found that homes near parks sold for 2 percent less than those further away. Possible reasons for this include crime, congestion, air pollution, and traffic noise.

While this study is specific to China, it raises interesting questions about the impact of parks on property values in other countries, including the United States.

Progress on Home Equity Theft Legislation

Several states have made significant strides in combating home equity theft and exploitative real estate fee agreements. Idaho recently joined Nebraska, Maine, and South Dakota in banning home equity theft. This term refers to the practice of local authorities keeping the excess proceeds from foreclosure sales. Last year, the U.S. Supreme Court ruled this practice unconstitutional, stating that any surplus from a foreclosure sale should go to the homeowner, not the tax authorities.

Additionally, Connecticut, Illinois, Louisiana, and Minnesota have passed laws to protect homeowners from unfair fee agreements filed as liens. Known as Non-Title Recorded Agreements for Personal Services (NTRAPS), these agreements often exploit homeowners by offering small cash incentives in exchange for long-term exclusive rights to sell the property. Now, 30 states have laws making NTRAPS unenforceable, restricting their recording, and providing for their removal from property records.

Ten states have also sued MV Realty, a Florida firm accused of exploiting homeowners through 40-year listing contracts recorded as liens. MV Realty has filed for Chapter 11 bankruptcy protection in 34 states, which the U.S. bankruptcy trustee office argues is a tactic to delay state prosecutions.

These legislative changes represent significant progress in protecting homeowners from predatory practices, ensuring that they retain their equity and rights in their properties.

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