Page 4 - April 2015 Issue

EDITOR’S NOTE By Matt Power, Editor-in-Chief

The Inside Scoop

2

How Can Big and Tiny Trends Coexist?

The news about homebuilding these days seems conflicted between

the ever-growing trend toward tiny-house living and the return of the

McMansion. But both sync up perfectly with demographic trends.
AWALL STREET JOURNALblog
post recently expounded on grandparents (a topic for another month).
the fact that the size of new They simply can’t afford the ongoing costs
homes sold in the U.S., just of a large mortgage, in part because a big
hit its largest median ever: portion of them are carrying far more
student debt than previous generations.

2,415 square feet. But the According to the NAR: “The concern

writers quickly added that this figure may over student debt is particularly alarming.

be short-lived—a blip in the market as we According to a number of recent research

transition to the Age of the Millennial: studies, college seniors who graduated with

the first-time, middle-class buyer, who is student loans each owed an average of

expected to boost the market for smaller, $25,250, up significantly from an average of

entry-level homes. $12,750 in 1996. Parents have accumulated
www.greenbuildermedia.com 04.2015
As someone who’s covered both of these “trends,” I don’t student debt as well, $34,000 on average.”
PERCENTAGE
find anything surprising about the coexistence of two How much impact will this debt have on homebuying? After
CREDIT: NATIONAL ASSOCIATION OF REALTORS®
“extremes” in home sizes in our current economic situation. all, 59 percent say they still want to own a home someday. But

If you look closely at who’s actually buying new homes now, in a 2014 NAR survey of potential first-time homebuyers, 57

you see that it’s the lucky few: older, mostly married couples. percent named student loan debt as the biggest factor preventing

At the same time, the number of first-time buyers is dropping them from saving for a down payment for a home purchase.

off precipitously, according to a new report from the National

Association of Realtors (NAR). THE TINY HOUSE THING

Set aside the fact that millennials may not share the same Millennials likely to enter the housing market as buyers are a

definitions of the good life as their suburbia-oriented parents and fairly narrow niche, underrepresented by large demographic

groups such as Latinos and African Americans. But they need

Young Adult Homeownership Rate affordable shelter badly, and tiny houses came along at about
the right time.
Home Prices Outpacing Incomes
So why tiny houses? In part, because they’re hip and trendy.
(under 35 years old) But you can also purchase one complete for about $30,000.
Drop it on a piece of land gifted to you by your middle-class
46

44 parents, and you’re living on your own—albeit in a space

42 the size of a small mobile home—for under $300 a month.

40 That’s an appealing number to young singles and couples

38 used to shelling out $1,000 or more a month in rent for a
36 small apartment.

So what’s the takeaway from this reality check on housing
34 demand? There’s nothing especially surprising or new
32 about the floor space “preferences” of these very different

30 demographic groups of buyers. I’ll be very curious to see how
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 the young millennials moving into their tiny homes respond
as the economy improves. Will they stick with their leaner,
QUARTER 1

Long-Term Renters. Home ownership among young adults under greener (albeit cramped) lifestyles, or immediately move up to
35 has reached its lowest point of the century. the big house in the bedroom community? Time will tell. —MP