Everyone looking at clues for weakness in the housing market and possible new trends. Bob Moon explored this in the recent piece called Downsize my space [APM] where he interviewed a series of experts (including me) and consumers on the idea of trading down to smaller houses or rentals. Essentially cashing out of the housing boom.

The main story idea came from David Seiders of the National Association of Homebuilders, who is essentially their spokesman and suggests that the trend in expansion of the average home size since the 1970’s is easing. Decreasing affordability will cause them to be built smaller to keep the prices down.

I can seen his point. As housing costs rise, it would appear to be a reasonable assumption that the average size would contract. He doesn’t appear to be providing real evidence of this as a long term change, however. I think a problem with this logic is the idea that home sizes increased since the 1970’s even as home affordability was much less in the 1980’s and 1990’s with mortgage rates 2 to 3 times as high and strict requirements on 20% down payments a standard.

I provided the observation that people are trading down, not to cash out, but to buy a second home, which has been a factor of improved affordability. Keep the payments the same, but have more places to live. I would suggest that the second home market would be hurt well before people would purchase smaller primary homes.

Listen to story [Real]


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