Fewer Traditional Single-Family Homes Are Built

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The recent crisis in the US housing market hit badly not only homeowners and investors, but builders as well. With the affordability of traditional single-family homes declining, builders are finding other options for generating stable profits. Currently, they are focusing on luxury homes and multi-family units.

The statistical data for the first quart of 2014 produced by the US Census Bureau reveals that the average size of a US home under construction increased by 3% on a quarterly basis and by almost 2% on an annual basis to reach 2,736 square feet. The median size increased by 1% and 0.4% respectively. The average size of newly built homes has been growing at an ever higher rate since 2011 and this trend will most likely remain. This is explained with the increase in the demand for bigger properties with luxury amenities such as home theatre rooms.

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Currently, the luxury home sales for over $400,000 accounted for 22.2% of all house sales in March 2014. They had exactly the same share as the single-family homes sold for $200,000 or less. Just 4 years ago, in March 2011, the share of luxury home sales accounted for 11.1% of all sales while the share of home sales below $200,000 was 41.7.

At the same time, the number of single-family house starts increased by just 0.1% from March to April 2014. The total number of housing projects starts increased by some 13.2% on a monthly basis. This makes the increase in single-family home starts quite insignificant. The larger total increase is due to 40% increase in the multifamily project starts.

The growing number of luxury family homes and multifamily units is likely to reduce the inventory of traditional single-family homes and their affordability even further. More and more first-time home buyers may be left out of the market. It is expected that builders will wait for credit standards to loosen and for the economy to improve before they start constructing more traditional single-family units.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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