The economist says first-time buyers accounted for only some 16% of last year’s new-home sales, or about half of their usual roughly 30% market share.
At the same time, he says, builders are finding bank loans, developable land and experienced construction workers in short supply. “You had a well-oiled construction industry [during the early 2000s housing boom], but when there was a downturn, many people left,” Melman says.
The expert says a shift to high-end homes has historically happened after every U.S. recession or housing bust and lasted for a few years.
So he expects newly built homes to keep getting larger, fancier and costlier for a while — albeit at a slower pace over time.
More evidence that the numbers about the increasing size of American homes is misleading. On one hand, it looks like the American appetite for more square feet continues unabated; household sizes shrink over time but homes keep getting bigger. Have to have room to spread out or to store all our stuff. Yet, the housing market has changed quite a bit since the early 2000s where the above story might have been more accurate. Today, home sizes are driven by a market with fewer first-time buyers, builders who are looking for higher-end profits, and lenders who have pulled back a bit and restricted lending to people with plenty of wealth.