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NAHB says trend toward smaller homes to outlast recession

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The recession has done more than impact the rate at which new homes are sold. It’s actually changed the way new homes are built.

The recession has brought about a paradigm shift. “Bigger and better” is being replaced by “smaller is smarter,” according to a recent study by the National Association of Home Builders, and this trend expected to not only outlast the recession, but become the new standard.

Dr. Paul Emrath, vice president for survey and housing policy research at NAHB, reviewed consensus data from 2005 to 2009 and authored Characteristics of Single-Family Homes Started in 2009. The numbers only tell half the story:

Emrath’s study shows the median size single-family home shrank from 2,268 square feet in 2006 to 2,100 in 2009. This isn’t just the product of stricter loan standards and a shaky re-sale market. Now more than ever, energy efficiency is viewed as a priority, not a luxury.

Note the number of bedrooms and bathrooms has barely changed over that period. Homeowners’ haven’t changed during this five-year period. Rooms are simply becoming smaller, along with the rest of the home.

“A house is a complex commodity,” Dr. Emrath told Marvin Windows and Doors in an interview Tuesday. “And there are any number of ways to upgrade it irrespective of its size.”

Dr. Emrath’s study also found a change in philosophy around less energy efficient features. For instance, homes built with a fireplace fell from 54.8 percent in 2005 to 48.8 percent in 2009. Heat pumps, which more evenly distribute warmth throughout the home, have risen from 31.4 percent in 2005 to 38 percent in 2009.

The study also suggests homeowners are applying the lessons from the recession of the early 1980s. In other words, don’t expect home sizes to rebound along with the economy:

“This time, part of the current home size decline may again be a temporary recession-related phenomenon,” Dr. Emrath writes. “But part can also be attributed to trends in factors like the desire to keep energy costs down, amounts of equity in existing homes available to roll into a new one, tightening credit standards, less emphasis on the pure investment motive for buying a home, and an increased share of homes sold to first-time buyers.

“Not all of these trends are likely to reverse themselves immediately at the end of a recession.”