In an interesting twist to the current real estate market, many homebuilders are now catering to buyers of middle age who prefer larger homes. Currently, the housing market in the US is doing quite well. In fact, this past August, new home sales reached their highest level over the past seven years. With this, homebuilder confidence is once again on solid ground. In addition, the number of mortgage applications is rising.
Larger Home Construction
However, new data recently released also shows that homebuilders are now starting construction of new homes at the fastest pace since the housing market crash. When looking at all the facts, it becomes clear that the housing market has turned the corner, giving the economy, as well as stock market, a significant boost. Even so, the market today is unique to what it was prior to the recession.
As people age, it appears that they are buying larger homes. For one thing, the average age of today’s homebuyer has risen from 35 to 43. During the housing boom of 2005, most homebuyers were around 39, but according to data from the US Census Bureau, that number is now 43. As stated by Skylar Olsen, senior economist with Zillow, most people now delay homeownership, similar to what we see in couples getting married and waiting to have children.
Growing in Size
From 2000 to present, the average home size was roughly 1,800 square feet. For years, that number changed very little. However, homes currently being built are 2,200 square feet and larger. The interesting thing is that instead of adding one more bedrooms, the additional square footage is going into more bathrooms. As Olsen said, middle-aged homeowners apparently want more privacy.
The other reason that homes are getting bigger is that many buyers look at larger homes as solid investments. Once the home becomes too large, it becomes rental property that yields a steady stream of income. Compared to average rental time of four years seen in the late 1980s, the average is now six years. That means homeowners can rent out homes for at least six years, knowing they have long-term and consistent income.
Even if someone does not stay that whole time, rentals are in demand, so finding another quality tenant is relatively easy. Rental homes are also in demand for students who are not yet in a position to afford purchasing a home. While younger people have interest in being a homeowner, most are in debt due to student loans, and not yet able to buy a home.
As demand for larger homes continues, homebuilders are staying busier than ever. Obviously, this means that more people have jobs. Ultimately, with a stronger housing market and more people working, experts feel good about the current state of the economy.
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