Single-family homes started in 2011* were a bit different than the ones builders started in 2010. Unpublished Census Bureau data show that, on average, homes started in 2011 were bigger than those started in 2010. Homes were also more likely to have more features and amenities. These developments must be analyzed with caution, however, keeping in mind that total single-family starts in 2011 were the lowest in the history of the series, at 429,000. In other words, home characteristics for 2011 are based on a much smaller pool of homes than just five or six years ago.
Some of the most interesting facts about single-family homes started in 2011 include:
- Average size rose to 2,522 square feet, up 6% from 2,381 square feet in 2010.
- The share with 4 or more bedrooms rose to 42%, up from 36% in 2010.
- The share with 3 full bathrooms or more jumped to 28%, up from 23% in 2010.
- The share with a finished basement jumped to 30%, up from 25% in 2010 (basement counts towards total square footage only if finished by the builder).
- The share with a 3-car garage or more reversed a six year trend, rising to 18% from 16% in 2010.
- The average sales price of homes started for-sale rose to $274,400, up from $264,900 in 2010.
These facts lead to an interesting question: how can the average home be getting bigger, more expensive, and have more amenities when the housing market remains weak and the overall economy is yet to see a robust recovery? The answer is simple: it comes down to who has been buying homes. In the last couple of years, a typical home buyer had to have a 20% down payment, a high credit score, well-documented income, and stable employment history in order to qualify for a mortgage.
As a result, and not surprisingly, many first-time home buyers were left out of the home-buying game (see Fed Chairman Ben Bernanke’s comments about first-time home buyers being disproportionally affected by tight mortgage market), leaving the market dominated by a segment of buyers who tend to buy better-than-average homes. It is entirely feasible that when buyers with less stellar bank accounts and credit scores are able to strongly reenter the housing market, the scales will shift down and size and amenities will retreat.
* Data for 2011 includes only the first half of the year.