Shrinking Homes: How Small Will Homes Go?

By Melissa Dittmann Tracey

Have the days of the 4,000-square-foot McMansion come to an end?

Maybe, according to a recent article in The Los Angeles Times by Nicholas Riccardi (see Home Sizes Change With the Times)

The size of the average America home shrunk by 11 percent last year, a faster rate than any time since the 1970s, according to the article.

In fact, the National Association of Home Builders is reporting that 90 percent of its builder members are opting to build small now due to increased energy consciousness, downsizing empty-nest baby boomers, and, not surprisingly, the softening economy. Builders are also going smaller with less-expensive models in trying to compete with the large inventory of discounted foreclosures dominating the market. (See KB Home Tries Tiny Homes to Attract Buyers)

“Families and lifestyles are changing,” Bobbie Cooper, director of sales for The Development Group, told The Los Angeles Times. “In 2005 you couldn’t build it big enough. Now it’s all about getting back to the basics.”

What have you noticed with your listings? Do the smaller homes seem to be selling faster than the larger homes in your market? Comment here or send an e-mail to with your thoughts for a possible article on this topic for REALTOR® Magazine.

Melissa Tracey

Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine, writing about home & design trends, technology, and sales and marketing. She manages the magazine's award-winning Styled, Staged & Sold blog.

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  1. Location trumps size in the Denver real estate market. The urban residential neighborhoods of Sloan’s Lake, Highland (Historic Potter Highlands specifically), LoHi, and others have small foot print homes and increasing sales prices.

    A restored bungalow I listed in Potter Highlands closed last week with only 1097 finished sqft (2194 total) sold for $365K after a bidding war. It was under contract in 5 days with no concessions. A home in Sloan’s Lake sold this spring for about $480K and 1900 total and finished sqft (large compared with others on the block…. avg home size is 1300 sqft). Recently I spoke with another realtor who referred to a home in Castle Rock (45 minutes south of Denver) as “just a little house” with only 2500 finished sqft (list price under $300K). I chuckled and explained to her that a 2500 finished sqft home in NW Denver is large!

    It is great to see smaller homes coming back in style… it benefits the owners and society in so many ways!

  2. Providing an international perspective, houses and apartments of smaller size are also more popular in Greece. For example recent research shows that apartments of 70-90m2 (which is about 230sqft – 296sqft) are preferred! However our USA clients here are looking for larger sizes (which is no surprise). Greeks and citizens from other countries today opt for smaller size properties mainly because they want to spend less money in buying and maintaining a property.

  3. Yes, buyers are responding to the current economic times and becoming aware of utility costs when purchasing homes and are figuring in square footage into that.. A new era of cost consciousness is upon us and agents will see that homes larger than 3000 square feet will be a hard sell in many areas. Where there are mutil-generational families living, it would be the exception, like in certain parts of the San Francisco Bay area. Like the Hummer, larger homes will become a relic and something that will be a hard sell.

  4. Judy Dobbs

    ‘Smaller’ usually means ‘less money’ and that seems to be where the market is in this economy! Right?? ‘Larger’ equates to costing more than ‘smaller’. Right?? The Feds are pushing first-time home buyers, etc., therefore, that is what is selling at this time! People who can afford a larger home and want to buy at this time continue to buy whatever size they want. Seems pretty simple to me………..don’t think it takes a ‘study’ to figure that out!

  5. kria lacher

    It is about time that smaller homes became more popular!! It has not been my experience that smaller = less money. That depends on housing type. In my market smaller detached homes get more not less per sq ft. Green condos that are tiny can get 337 per sq ft!! That is not chicken feed

  6. The main reason for the active sale of small houses is the fact that many potential buyers can not upgrade since they can not sell their house at a decent price,while the government is actively sponsoring renters to buy the low end property. In my area that are usually older small houses.
    Most of these people want a larger home but can not afford it.
    I believe that many down sizers that come from large homes with spacious bedrooms,dining room,kitchen bath rooms,garages ,etc would like to move to no maintenance ,efficiently built homes but still want spacious living areas ,They are OK with 3 large bedrooms ,a large great room with kitchen and if possible a 3 car garage and also ample storage space. They still want their space but in an efficient way.
    The 2 story entrance hall , family room and living room might disappear ,also the ceiling height might get back to a useful height ,like 10 feet .
    Also remember that the only constant is change .A lot of the present thinking is dominated by the recent short term peak in energy prices, largely driven by speculation. It could well be that in the future energy prices drop due to the abundant availability as result of technology and government policies.