Embrace Smaller, More Affordable Homes: Your Path to Homeownership

Are soaring mortgage rates and escalating home prices holding you back from your dream of homeownership? If so, there's a silver lining on the horizon, and it comes in the form of smaller, more affordable homes. Ali Wolf, Chief Economist at Zonda, offers some encouraging insight:

"Buyers should anticipate a significant increase in the availability of entry-level homes over the next 12 to 24 months."

In some ways, smaller homes have already arrived. When the pandemic reshaped our lives, our homes took on new roles. They became not only places to live but also spaces to work, study, exercise, and more. Those with ample space were more inclined to hold onto it, while others sought to sell their compact homes in pursuit of larger ones. Consequently, the homes entering the market during the pandemic were often more compact than their pre-pandemic counterparts – a trend that continues today. Larger homes, typically favored by families with school-going children, tend to hit the market during the summer months.

Given this seasonality, historical trends, and the impending arrival of fall, we can anticipate smaller, more budget-friendly homes to make their debut throughout the remainder of the year.

This is excellent news, especially since the demand for these smaller homes has risen, as highlighted by Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB):

"...as interest rates increased in 2022, and housing affordability worsened, the demand for home size has trended lower."

What Does This Mean for You?

The convergence of the seasonal pattern of smaller homes appearing on the market in the latter part of the year and builders introducing smaller, more cost-effective newly constructed homes to the market right now is a boon. It's especially heartening if you're struggling with the affordability of homeownership. Mikaela Arroyo, Director of the New Home Trends Institute at John Burns Real Estate Consulting, acknowledges the potential for an uptick in the availability of smaller homes:

"While it may not solve the affordability crisis, it does create opportunities for individuals to secure an entry-level home in a desirable area."

Bottom Line

If the prospect of owning a smaller, more affordable home appeals to you, rest assured, your options are expanding. To stay updated on the available homes in your area, let's connect. Your journey to homeownership might be closer than you think.

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