Social Trends, part I: Bigger Houses
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Viewpoint 05/19/2010
Social Trends, part I: Bigger Houses
There are social trends out there, and then there are social trends out there. What does that even mean, you ask? Some social trends are great for dinner conversation and the evening news, or for what you think other people should be doing. Yet many of us tend to act a little differently when it’s our own money on the line!
For example, we all know how important it is for our country to reduce our dependency on foreign oil, right? Yet every time I leave my house I see more big pickup trucks and SUVs than hybrids and Smartcars, and probably by a 10 to 1 ratio! (my estimate.)
As for housing, we’ve all heard terms to describe the trend of ever-larger houses being built – McMansion, Garage-Majal, Starter-Castle, Hummer-House – and although the concept “feels” true, I’ve never seen the facts to back it up. In today’s Viewpoint I’m going to share with you some research and statistics I pulled from the MLS, along with my commentary and thoughts about what they mean. Lots of tables and charts below..
Bigger Houses
Let’s start with the basics – square footage. Here is a chart showing the Average Square Footage of all single family homes sold via the MLS, from 2000 through 2010 YTD. I broke out several of the cities separately as well.
Note 1 – click on any table/chart to see it full-sized.
Note 2 – all data is based on Single Family Homes in Maricopa County. Data is pulled from Arizona Regional Multiple Listing Service (ARMLS) and is believed accurate but not guaranteed.
First thing I noticed was that the total line (in bold) was obviously heading upward. 1,900-ish sqft in the early 2000s; 1,970-ish sqft in the mid 2000s; 2,000+ sqft in the late 2000s.
Then I looked at some of the cities individually. Avondale, Glendale, Mesa, and Phoenix did not show much of a change in size. Interestingly, these cities are mostly land-locked and did not have as much new construction during the last decade.
Buckeye, Chandler, Fountain Hills, Gilbert, Goodyear, Litchfield Park, Peoria, Scottsdale, Surprise… These cities, which saw hundreds of new subdivisions created during the last decade, all had a significant increase in their average sized home.
This makes it seem reasonable that people wanted bigger, builders built bigger, and today those bigger homes continue to change hands.
Let’s see if these changes in size translate into changes in the actual number of sales.. Here is a table showing the Number of Sales, rather than the size of sales:
It’s difficult to compare 2009 with the first 4 months of 2010, so I extrapolated 2010 into a full-year number by multiplying the YTD through April by 3:
I had a thought about the housing depreciation over the last couple of years favoring the larger houses by making them more affordable &/or valuable. Comparing the pace of 2010 sales with 2009, it’s interesting to see most of the cities identified above as having growth in housing size are showing a year-over-year gain in sales volume or are very close to last year’s volume: Buckeye, Fountain Hills, Chandler, Gilbert, Goodyear, Scottsdale, Surprise.
On the other hand, 3/4 of the cities identified as not showing growth in home’s sizes are also showing year-over-year declines in sales: Avondale, Glendale, Phoenix.
I’m not sure this proves my theory about declining prices and increased values, as there are more variables at play here, but it does make me want to explore it further – maybe another Viewpoint?
Next I wanted to look at the sales history more in terms of home sizes, with and without regard to each city. Here is a chart showing the Number of Sales, By Size, for each year in the decade. (I broke the home sizes into 500 sq ft intervals.)
What did this chart tell me? Nothing – it gave me a headache. So I re-configured the numbers into percentages – what was each number as a percentage of the total? Or in other words, is a particular size becoming a larger or smaller part of the overall sales market?
That’s better, but it’s still awfully hard to spot a trend. What happens if I break the sizing groups into larger categories?
BINGO!
* Homes less than 2,500 sq ft used to make up 83%-84% of the market less than a decade ago, while the last few years have seen them at 75%-80%.
* Homes in the 2,500 – 4,500 sq ft range have increased their market share by almost a third, from 14%-15% up to 18%-20%.
* Homes larger than 4,500 sq ft, while still a tiny fraction of the overall market, have doubled their market share!
Conclusion
All else being equal, most people would prefer more space – bigger closets, bigger rooms, more rooms, bigger garage, bigger yards, more space between neighbors, etc. Not once have I had a client say “the home is perfect in every way, but I really wanted a small, sliding door closet – that his & her dual walk-in closet set up just won’t work for us.”
Of course, all else is never equal – price, commute times & the cost of gasoline, geographic anchors like mountains, golf courses, and desert preserve, area retailers and infrastructure – these can all have a dramatic impact on desirability.
I wouldn’t advise to choose big over small just for the sake of being bigger. But I would advise to consider the current trend in your decision making process!
Non-related Reading
Here are some additional articles we’ve written recently which you might find interesting:
Your glad to know he’s not the only one who would prefer a little more elbow room Realtor,
Chris Butterworth
Chris & Heather, The Phoenix Agents
at Thompson’s Realty
http://thephoenixagents.com
623-570-9940
Chris Butterworth and Heather Barr are The Phoenix Agents at Thompson’s Realty. The Phoenix Agents are Realtors in the Greater Phoenix area, who have built a loyal following over the years by offering superior service levels coupled with a low-pressure approach. You can visit http://ThePhoenixAgents.com online to learn more about Chris, Heather, and the Phoenix-area real estate market. If you have real estate questions or needs, please contact us anytime; we’d love to hear from you.
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