Numbers Count: New home sizes & prices rebound
Numbers count. They matter to bankers and to prospective homebuyers, sellers, and real estate professionals. Here’s my take on the key numbers on the housing market this week.The numbers: The average square footage of a new, single-family home has now surpassed the pre-crisis size, according to data released Nov. 4 by the National Association of Home Builders (NAHB). The average newly built single-family house is 2,802 square feet, says NAHB’s survey of homebuilders conducted in August. This is up from 2,607 square feet in the prior survey two years ago, and just above the peak of 2,716 square feet in 2009, before the housing crisis brought a dramatic downsizing of new homes. Lot sizes are also up significantly from two years ago, though still smaller than pre-crisis acreage.
With bigger lots and houses comes a bigger price tag: The average new home price is $468,318, up from $399,532 two years ago and above the survey’s peak in 2007, when the average new American home sold for $454,906.What counts: New versus old? This is frequently a big question for homebuyers. The NAHB’s survey this summer shows clear trends in new homes to consider.
- Yards: If you want a yard for kids or don’t want a yard to maintain, then keep in mind that the average lot size for a new home has gotten considerably larger in recent years. NAHB’s data shows a 40% increase in average lot size in the past 2 years.
- Living space: Square footage matters. Like hemlines, square footage goes up and down with economic cycles. The average new home is now 21% bigger than it was 4 years ago. A bigger home brings potentially higher heating and cooling costs that you will want to consider and factor into your budgeting. Energy-efficient home design is gaining ground, so be sure to ask questions about green features of any home you’re looking at, new or old.
- Price: No surprise, home prices are rising. That’s true for new and existing homes in many markets. When prices are rising and homes are selling quickly, some buyers may be tempted to rush to make a decision on a home. I like to remind home shoppers to look closely at their full financial picture and develop a budget to help fully understand the cost of homeownership. One good place to start is with the Consumer Financial Protection Bureau (CFPB) monthly payment worksheet. This 3-page worksheet is helpful in itemizing the myriad costs of homeownership — whether you’re considering a new home or an existing home.