Remember that much-anticipated trend toward smaller houses? You know the one: Because of the recession and housing bust, homebuyers will be more cost-conscious and less frivolous going forward.
Well, it hasn’t happened—at least not yet. And it probably won’t as long as lenders keep a tight grip on their wallets, according to figures reported recently at the annual convention of the National Association of Home Builders (NAHB) in Orlando. …
Why more instead of less? First-time buyers—the purchasers who tend to go for smaller, less expensive houses with fewer features and amenities—were largely ignored by homebuilders in favor of people moving up to their second, third, and fourth houses, explains Rose Quint, a research specialist at the NAHB. Those are the people who have well-documented incomes, strong employment histories, great credit, and lots of cash for a downpayment. And those are also the people who tend to go for a lot of splash and flash. …
However, the NAHB economist says she thinks that will change—and a trend toward smaller homes finally will take root—once lenders loosen their requirements and “allow less-creditworthy buyers back into the market.” But that won’t happen this year—at least not if what builders told the association in a December poll is on target.
In Vancouver the bare land costs tend to drive residential housing to get larger and larger. When the cost of the structure is only a small part of the total purchase, it makes sense to go big. A small increase in the cost of land+building gives you a much larger increase in your living space and amenities.
It’s like buying computer hard drives – there’s not a lot of motivation to buy a 500GB drive for $80 when you can get 1000GB for $100.