Instead of tiny homes and condos in the city, homebuyers are looking to spread out in larger homes.
The downsizing trend appears to be on its way out. Instead of tiny homes and condos in the city, homebuyers are looking to spread out in larger homes, according to a report by Zillow. The Group Report on Consumer Housing Trends found that half of all homebuyers are under age 36 and that median square footage of new homes is up, signaling that Millennials are utilizing their spending power to upsize their living spaces.
This comes in reaction to the uncertain years during and after the Great Recession, when the home buying and homebuilding sectors dropped dramatically and took years to recover. Now, buyers are back on the market, and they're turning to larger lots of land and bigger houses to suit their needs.
Buyers are spending for more square footage
The study found that 83% of home buyers were on the market for a single-family detached house, and that 78% of those searching indeed wound up purchasing a single-family home. These kinds of homes - often equipped with a back yard and garage - tend to have more space, which lines up with a trend in rising square footage. A new review of census data found that median square footage in newly constructed houses is up 20% since 2000. In the last 17 years, median square footage in newly built homes jumped from 2,000 square feet to 2,500 square feet today.
In 2016, the typical home purchased in the U.S. had an average of 1,900 square feet, three bedrooms, one partial bathroom and 2.2 full bathrooms. While upsizing in a big way, Millennials still tended to purchase slightly smaller homes than Generation X and Baby Boomer buyers. The study showed Millennials' homes had a median size of 1,800 square feet, while Gen X and Baby Boomers bought homes with a median 2,000 and 1,950 square feet, respectively.
The median price of a home is $222,000, the report found, while first-time buyers tended to spend a bit less on their starter homes - $200,000. Generation X buyers spent the most on homes, coming in with a median of $245,000 spent on a home.
Giving a starter home lasting power
Once in their homes, the data showed that today's homebuyers aren't afraid of a little hands-on work. Fifty-seven percent of those surveyed made major improvements or repairs to the home they purchased, with 67% of Millennials undertaking major repairs to their homes. Meanwhile, 60% of Millennials asked the sellers to make major repairs to the property before committing to a residential mortgage or purchase. In contrast, just 31% of the Silent Generation, 35% of Baby Boomers and 52% of Gen X buyers requested repairs before closing.
The emphasis on home improvement and ultimate investment in repairs indicates what may be an emerging trend - longevity. While stretching their budgets to upgrade in space and amenities, today's buyers seem to be planning to stay in their newly purchased homes for a considerable duration, transforming the idea of a starter home into something with more lasting power.
Millennials in particular value homeownership in ways different to their older counterparts, launching over the concept of a starter home. Instead, these buyers tend to invest in properties on the higher ends of their budgets to get the open spaces they desire now, planning to remain in those homes for longer periods of time.