Are surging mortgage rates and skyrocketing home prices boxing you out of the housing market? There’s a silver lining on the horizon, according to Ali Wolf, Chief Economist at Zonda. She predicts an influx of more compact and cost-effective homes entering the market in the next one to two years.
The Current State of Compact Homes
The COVID-19 pandemic reshaped our relationship with home spaces. Our residences evolved from mere living quarters to multifunctional hubs—offices, classrooms, gyms, and much more. For those who had larger homes, holding on to them became a priority. Conversely, people living in smaller spaces sought to upgrade, thus populating the market with more compact homes. This transition began during the pandemic and is still prevalent today.
Furthermore, market trends indicate a seasonal cycle in the sizes of homes available. Larger properties typically appear in the summer when families with school-free children consider relocating.
What to Expect This Fall and Beyond
As autumn sets in, historical data suggests that we’re about to see more affordable, smaller homes on the market for the remainder of the year.
Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), highlights the growing necessity for such homes:
“With the rise in interest rates in 2022, and the subsequent dip in housing affordability, the market’s appetite for larger homes has diminished.”
How This Trend Impacts You
The imminent surge of smaller homes this autumn, along with new, economical constructions, is promising news. This is particularly beneficial if the current housing market has put a strain on your budget. Mikaela Arroyo, Director of the New Home Trends Institute at John Burns Real Estate Consulting, notes:
“While this trend may not entirely solve the housing affordability crisis, it is carving out new opportunities for people to secure an entry-level home.”
The Bottom Line
If the idea of a cozy, budget-friendly home appeals to you, the future looks promising. To stay informed about available listings in your area, let’s get in touch.
A Message from Alex Parmenidez, a Decade-Long Realtor