NAR’s Chief Economist Lawrence Yun spoke to the Wall Street Journal recently about tiny homes.
The trend toward purchasing smaller homes, those less than 1,000 square feet, isn’t actually a new one for many young, first-time buyers. In fact, in the years prior to 2008, around 10 percent of first-time buyers purchased a home that measured 1,000 square feet or less.
Younger buyers trending toward smaller homes changed during the housing downturn when large inventories of homes for sale and historically low interest rates increased affordability and made it easier than ever for first-time buyers to make larger home purchases. Starting in 2009, the percentage of first-time buyers who purchased homes less than 1,000 square feet fell drastically to around 2 percent, where it has stayed for several years.
Today’s low inventory of homes for sale has increased home prices in many markets and the lack of affordability may be the real catalyst, and not just the start of a new trend, for why first-time buyers are perhaps once again purchasing smaller homes.