No Rabbit Hutches in the U.S.
Home Sizes Here Not in Permanent Decline
by Michael Collins
When a European diplomat visited Japan in the early 1980s,
he famously remarked that the Japanese people were workaholics living
in rabbit hutches. The Japanese took great pride in the former attribution
but were greatly insulted by the notion that they lived in tiny homes.
This comment so injured the Japanese psyche that, when I studied in Tokyo
a dozen years later, that diplomat’s comment remained part of the national
Increases Then Decreases
It was probably this experience that has caused me, over the past several
years, to reject the notion that we are headed for an era of smaller homes
in this country. Indeed, home sizes increased from roughly 1,400 square
feet in 1970 to roughly 2,700 square feet in 2009. This steady upward
progression saw brief reversals when recessions pushed the average size
of homes back downward out of economic necessity. In the recession of
1982, the average newly built home was only 1,710 square feet in size.
In general, though, homes grew in size until they peaked in 2009. By 2010,
average home sizes had dropped to 2,135 square feet, according to the
U.S. Census Bureau. That 565-square-foot decrease is extremely meaningful
to fenestration companies. A decline of that magnitude probably means
the home has shed one interior door, one closet door and two or three
windows. Depending on the layout of the home, a drop of that size may
also eliminate a sliding door or similar entry door.
Proving the Experts Wrong
In 2010, housing economists began making the case that homes would continue
to shrink. While they acknowledged that past recessions had pushed down
average home sizes temporarily, they believed that this time it would
be different and that homes would continue to get smaller. Their reasons
included the difficulty of obtaining mortgage financing for a large home.
Another critical factor included the prevalence of young or first time
buyers who tend to purchase smaller homes. A third key factor that typically
was mentioned was the desire for more energy-efficient homes. Recently,
the U.S. Census Bureau released data confirming that, in fact, home sizes
have not entered a permanent decline. In fact, home sizes rose by roughly
100 square feet from 2010 to 2011. Now, that is not as much as they had
fallen, but when predictions have been made that home sizes are in permanent
decline, an increase in size of 4.5 percent is very noteworthy.
Needless to say, improvements in the employment picture
and the overall economy deserve a portion of the credit for the increase
in average home size. Builders report that other factors included the
low cost of home lots and the relatively low cost to build homes. The
abundance of inexpensive lots allows builders to sell homeowners “more
home” for their money. Other factors that play a role in the increase
in average home sizes are the need for many baby boomers to create a multi-generational
home that allows their parents to live with them in their advancing years.
Such arrangements have been commonplace in other countries for centuries
but they are relatively new to this country. Dialing in all of the various
factors that lead to the trend in average home size, we maintain our previous
position that home sizes will return to their long-term pattern of increasing
steadily. It appears we’re safe from residing in rabbit hutches for the
Michael Collins is an investment banker with Jordan
Knauff and Co. He specializes in mergers and acquisitions in the door
and window industry.
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