A failure to accommodate young people in some of the realty markets has happened due to the fact that, nationwide, most homes have become larger and therefore more expensive over the last fifty years.
Consequently, they have finally become too pricey for the average first time buyer and according to a recent survey in Massachusetts, this is causing Boston to lose its youth. This withdrawal of youth has been acknowledged and discussed in Boston, but the solution is still undecided.
Indisputably, average house sizes have expanded over the years. Whereas in the post World War Two era, homes were considered luxurious if they were over 1,000 square feet, nowadays the average home is 2,500 square feet and is still increasing!
The fact that most homes have become larger and more expensive has pushed most first time buyers out of the market. Many builders have noticed a short fall in the small homes market and may start adding smaller homes to their inventory.
What brings this new awareness that small homes are okay? Is it the sustainable living guilt, or is it that so many baby boomers are out there looking for smaller homes to retire to? Apparently the answer depends on which part of the USA you’re referring to.
There have been extensive studies of house prices and affordability for young people carried out recently, and they show that young people will often leave areas that are offering only high cost homes. One recent study was carried out in Boston, Massachusetts, an area that is known for its opulent and luxurious housing.
Boston is the third most expensive property market in the nation and according to the ‘Boston Globe’ newspaper, young people are moving away ‘in droves’ because of the house prices. This is costing Massachusetts the ‘human capital’ needed for future growth and economic expansion.
In Boston, this youthful exodus has been recognized and hotly debated. Part of the blame has been laid at the local government’s feet with their residential zone rulings favoring large lots. A study proved that homes built from 1998 to 2002 used an average of 1.3 acres per lot.
With the cost of a building lot in Boston quoted at around $300,000 and a house costing around $250,000, young people have no chance of owning a home. This type of situation could easily be replicated in many parts of the USA.
For instance, Florida could have the same problem due to its older population; because it is such a popular retirement area approximately 17% of the population is over 55.
Perhaps learning from Boston’s mistakes and not wishing for it to be duplicated in Florida, the news in this southern state is that the government is trying to encourage more first time buyers. This will expand the younger segment of Florida society and consequently will also be likely to increase the permanent population.
Usually, new homes boast considerable square footage and cost substantial dollars. It is a recognized fact that the average first time buyer cannot buy a brand new single family home.
They will often have to buy an existing home and become established in the realty market before buying a brand new home. This entails accruing equity in the home, perhaps renovating it, and then selling it to move up the property ladder.
Builders in Florida have announced that they will be constructing larger numbers of smaller homes in order to offer a choice of lower priced properties.
The St. Petersburg Times reported that a Tampa Bay Builders Association spokesman said that builders will still be building super-sized homes but there will be more of the smaller ones being built as well.
This change in thinking is not seen as a fad by builders, but as one way of bringing down the price of a house to a more affordable level. Lower prices in the housing market are more popular with prospective buyers than such luxuries as king size bathrooms and extra large rooms.
People are economizing when buying a new home, say the builders. For instance, they often choose not to install granite counter tops, knowing that they can do it themselves later.
An average ‘shrink back’ is from 2,200 square feet to 1800 square feet. Some two bedroom houses are actually being built with the square footage not much over 1,000.
The cost of the raw land is also a factor in the price of the house. If the home is smaller and two units can be built on one plot of land instead of one unit, then obviously the price of the house will be lower.
The news in Florida that the government is trying to encourage more first time buyers shows that they are ensuring that the younger generation can still flourish in Florida. Hopefully this means that Florida will avoid the same pitfalls as Boston; perhaps it also shows the way for Boston to re-coup?