25 - Exploring the Benefits of Smaller Homes and Finding Your Perfect Space

What if we told you that choosing a smaller home could actually lead to a happier, more fulfilling life? Join us as we explore the ever-changing concept of the "right size" home and discuss how sometimes, less is more. We'll take you on a journey through the history of home sizes, from the early 20th century to the present day, and discuss the impact of events like the post-World War II housing boom, the energy crisis, and even the COVID-19 pandemic on our perception of the perfect home size.

Discover the benefits of owning a smaller home, such as lower maintenance and utility costs, and how it could contribute to building generational wealth. We'll also dive into the challenges of smaller homes, like storage and resale value, and provide practical tips on working around these issues. Plus, learn how to make the most of the space you have - regardless of square footage. Don't miss out on this insightful conversation that could help you make the best decision for your lifestyle and housing needs!

Transcript

Speaker 1: 0:00

Welcome to the First Time Homebuyers podcast, where we guide you on the exciting journey of purchasing your very first home. Today we're going to talk about finding the right size home for you and how it might be okay to buy a smaller home. It's easy to get caught up in the square footage race, looking at only homes over a certain size. You might find that a home on the smaller size might actually be more beneficial for you over the long run. According to Yardee Matrix data national data from two years ago a two-bedroom apartment has an average living space of 1,006 square feet. In San Diego it's roughly 996 square feet. Now, when looking at a single family home, the average two-bedroom in Southern California that sold in the last six months is 1,352 square feet, while in San Diego it's 1,234 square feet. What we're looking at is a 25% increase in San Diego to a 35% increase. When we're looking at a more regional level, needless to say, even the same number of bedrooms, you're already looking at a fairly substantial increase in living space alone. But even with a home that, on average, is larger than an apartment, how much larger do you need to go? I think the big takeaway is to first realize that you're likely moving into a much larger living area and to not be dissuaded by a square footage number. So I want to talk about four key points. The first is how homes have changed through the years. Number two what are your long-term plans? This can include current and future family plans, relocation options and things that might affect the resale value. Number three your lifestyle and how that might influence your decision, and this is going to include looking at homes that may have more emphasis on different room types from larger backyards, maybe smaller individual rooms, all within a similar square footage. And the last number four your budget. So let's start with talking a little bit about how homes have changed over the years, because this can also help narrow down homes that you might not have considered before.

Speaker 1: 2:24

Homes during the early 20th century were generally smaller and much more modest compared to later decades. The average home size was around 1200 square feet, with most houses featuring very simple floor plans, small rooms and only the most basic of amenities. Now, going into the 1920s to the 1930s, homes began to incorporate what we would consider more modern conveniences indoor plumbing and electricity. But with the Great Depression in the 1930s, there was a huge slowdown in new home construction and a renewed focus on affordability, meaning smaller homes. But come into the 1940s, post-world War II housing boom led to a significant increase in home construction, with a focus on, again, affordability mass produced homes, mostly for the returning veterans and their families. The average home size began to increase slightly, reaching about 1,300 square feet. Many homes were built with minimal, traditional styles, very simple but functional designs and really focused on the suburban living. But then, when we start looking into the 50s and 60s, the suburban ideal became increasingly popular. Families started moving away from the urban areas, looking for larger homes and just more space. The average home size continued to grow now to 1,500 square feet. By the end of the 60s, we started seeing open floor plants, attached garages and large yards becoming standard features.

Speaker 1: 3:58

When we moved into the 1970s, though, there was a shift towards more energy efficient homes, and that was really in response to things like the energy crisis and just a general increasing environmental awareness. The average home size continued to grow, reaching around 1,700 square feet, but there was a greater emphasis on things like insulation and energy efficiency, especially with things like windows, and including split level and bi-level homes, which really gained a lot of popularity because they added more living space on those smaller lots. Then we move into the 80s and this is where the trend of larger homes really began to take off. The average size of a single family home went from 1,700 square feet in 1980 to nearly 2,100 square feet by the end of the decade. This increase in size was driven by a growing economy, low interest rates and really a desire for more space to accommodate growing families and new household technologies.

Speaker 1: 5:01

Then we come into the 90s and the McMansion era began. This really was construction of large homes with big open floor plants, high ceilings and really a focus on more luxury type items. The average home size continued to increase, reaching around 2,200 square feet by the end of the decade. Then, the early 2000s, we saw kind of a continuation of this trend, but the average home size peaked at about 2,500 square feet in 2007. With the housing market crash at the end of 2008, the subsequent recession in the late 2000, there was actually a shift in priorities for many homeowners. As a result, there was a growing interest in smaller, more affordable and more energy efficient homes.

Speaker 1: 5:46

In the 2010s, the tiny house movement actually gained momentum, with more people embracing more minimalism and downsizing to smaller, more sustainable living, while the average home size actually remained stable, the average home size continued to increase. It's around 2,400 to 2,500 square feet. There was a growing interest in homes between the 1,400 and 2,000 square feet. This shift was really driven by factors such as environmental concerns, financial stability and a desire for a little bit more simpler living.

Speaker 1: 6:19

As we're in the 2020s, the COVID-19 pandemic has further influenced home-size trends. More people are working remotely and spending more time at home. There's a renewed interest in having additional space for things like home offices, gyms and, especially, outdoor living areas. However, the desire for energy efficiency and affordability still remains very important, leading to a continued interest in smaller, well-designed homes that maximize space without sacrificing comfort. When you shop for a new construction home today, you'll often find a blending of these aspects High efficiency, larger open living spaces with lofts or dens, or extra rooms that can be used as home offices. I see a trend in slightly smaller homes that have very well thought out layouts with large emphasis on common areas. The overall size of homes has doubled over the years, but room sizes in American homes have evolved to accommodate changing lifestyles, preferences and even technological advancements. Let's look at those a little bit more specifically.

Speaker 1: 7:28

Living rooms in the early 1900s were smaller and very much formal rooms serving as space for entertaining guests. Now, as open floor plans became popular in the mid-20th century, living rooms began to expand and merge with other living spaces like dining rooms and family rooms. So today, living rooms are generally more spacious, with many homes featuring great rooms that combine living, dining and kitchen areas for a more open and connected feel. If you are one that really likes having a formal dining area, you may want to look at a home that's more built in the 60s or 70s or earlier, whereas the homes built in the 90s and beyond will often have those as just large open areas. In the mid-20th century, bedrooms were typically smaller and more modest, with limited storage and closet space. As home sizes increased in the latter half of the century, bedrooms also grew larger, with more emphasis on walk-in closets and sweet bathrooms. Today, master bedrooms are often very spacious, with ample storage and, quite honestly, luxurious in-suite bathrooms, while secondary bedrooms may still vary in size depending on the home's overall square footage. If the bedroom size is really important to you, the newer homes tend to have larger rooms. Your older homes will definitely have smaller rooms.

Speaker 1: 8:50

Early 20th century kitchens were generally small and utilitarian, with limited counter space and very few built-in appliances. As cooking and entertaining became more intertwined, kitchens began to grow in size and functionality. The introduction of the open floor plan in the mid-20th century really further transformed kitchens into the central hub of the home large islands, lots of counter space and a much more open and connected layout. Today, kitchens are often the focal point of a home, with an emphasis on both functionality and aesthetics. If you are looking for a home which has a kitchen as a centerpiece, often you're going to be looking for a home built in the last 20 to 30 years Now.

Speaker 1: 9:34

Early 1900s, bathrooms were small basic fixtures, limited storage and as indoor plumbing became more widespread, bathrooms began to incorporate more modern conveniences and grueling size. By the mid to late 20th century, bathrooms featured more counter space built in storage, larger showers or bathtubs. Today, bathrooms, especially master bathrooms, are often designed as spa-like retreats, with separate showers and tubs, double vanities and really luxurious finishes. If you're looking for a home that has a lot of multiple bathrooms that are very large and accommodating, it's definitely going to be something in the last 10 to 20 years. Sometimes The homes built in the 50s, 60s, 70s oftentimes only even have one bathroom, unless something's been done and updated them to have multiple bathrooms. Now the concept of a dedicated home office is a more recent development, becoming popular again in the last few years as remote work and technology used to increase. Early, home offices were often just small or repurposed rooms or nooks within the home. Today, home offices have grown in size and importance, with many homeowners seeking dedicated, spacious workspaces that can accommodate multiple workstations and technology needs. If that's something that's really important to you, again, this is probably something you're going to want to look at new construction homes, because they're going to have built-in office space already there.

Speaker 1: 11:06

Why the history lesson? Well, when you're looking for a home, you may want to really consider the year the home was built that most closely suits you and your lifestyle. If cooking and the kitchen is something that's center your social life, then a home built in the 60s or later, with a growing emphasis on each decade later, with bedroom sizes tending to also grow with each year. If that's not something that's very important to you, then you may be able to find an older home with a smaller square footage that still accommodates large social areas. For some, a master bathroom doesn't need to be a spa-like experience, and so home that's 20 or 30 years old may be something to consider, especially as many of the bathrooms were smaller than today, but still fully functional. Homes built in the 70s really started to utilize the space in a new way and added a lot of energy efficient options into the home. If those are important factors, you may find that the size isn't as noticeable.

Speaker 1: 12:07

So now let's talk about long-term plans. This includes current and future family plans and relocation options, which also affects resale value. So let's talk about whether you're looking for a starter home or a forever home. Most people buying a starter home plan to stay there for maybe the next 5 to 7 years. If you have school-aged children, then it's important to look at the various schools, parks and even nearby shopping areas. The goal is to find a place that not only meets your family's current needs, but also offers potential for the near term future.

Speaker 1: 12:43

Starter homes are usually going to be smaller and more affordable to you, but the expectation is that you will outgrow it and need to purchase another home. This can be a great way to use your home's growing equity from appreciation, as well as the equity you build from paying down your principal, to use towards a down payment. There is something to be cautioned about. In some markets you may have a starter home but the property values increased faster than you could save, causing you to be priced out of a larger home in your neighborhood. We're seeing this a lot across the country as home prices have soared and interest rates have increased, lowering your buying power. So make sure, even if it's a starter home, that it's still going to accommodate you comfortably enough to live for maybe more than just those 5 to 7 years.

Speaker 1: 13:33

Now. If you're planning on buying your forever home, then you want to really think about possible long term things that are important to you. The size of the bedrooms may be less important than the quality of the schools or the availability of nearby parks and recreational activities. The best advice I can give is to take the time to think through what you need and want now, as well as what you may need in the future, such as a larger backyard for children or pets or a larger kitchen for entertaining. Now let's talk about your lifestyle and how that might influence your decision. This includes looking at how homes may have more emphasis on different room types, from larger backyards to smaller individual bedrooms within a similar square footage.

Speaker 1: 14:19

I've seen some amazing homes with their four bedrooms with a large backyard, yet they're 1,400 square feet. For many that's just too small. But when you walk through the home you may find that it has a really great use of space. The layout works and it has all the features you're looking for. This probably would have been filtered from your list. I think it's really important to consider a home that is 1,400 square feet and larger. You may be surprised what it can look like. The last part about your lifestyle is resale value.

Speaker 1: 14:51

If you plan to move or your work isn't as stable as you'd like, you may want to consider how the size will affect your ability to sell the home. Just as you've likely filtered out a certain size home from your search, others will too. Even though you may have fell in love with the home and its great layout for the size, it can be hard for others to come to the same conclusion without touring. It's something you'll have to consider. A lot of buyers are putting 2,000 square feet or maybe 1,750 square feet is their minimum and anything below that they won't even tour. If you have a home that is on that smaller square footage size let's say maybe under 1,700 square feet, you should expect that the home selling process will be a little bit more difficult and the time on market to be longer. You may win overall if the price of the home is a lot more competitive than larger homes, once you get people to go ahead and tour.

Speaker 1: 15:45

Now let's talk about budget. We just talked about pricing and how it could be more advantageous, but there's several advantages to buying a smaller home. From a financial standpoint right, the overall cost of ownership is going to be lower, both maintenance and utilities. A 2,100 square foot home will usually cost upwards of 50% more in heating and cooling expenses as a 1,700 square foot home, and it's just because there's that much more area to cover. Major issues like roof repairs are also less expensive, as you simply have less roof. From a daily cleaning standpoint, there's less to clean, so you can spend more time living.

Speaker 1: 16:22

Smaller square footage homes also have a smaller footprint on your actual lot. If you're buying an attract, many of the homes will have a similar size lot, but a smaller home will take up less space, giving you more outdoor room. This can be a huge benefit for those with children or pets, who can take advantage of that outdoor freedom, or even those who just like to entertain with a backyard barbecue and get together. To me, the largest drawback to a smaller square footage home may not be as apparent at first, and that's storage. Expect a lot less closet space, less cabinet space and kitchens, fewer linen closets. But if the trend of the last few years with tiny homes has taught us anything, it's that there are a lot of options for clever storage, making use of less and living more. So maybe it's not a bad idea to take a hard look at what material things you have and look at what's most important to you.

Speaker 1: 17:16

And the last part of budget is that a smaller home will usually cost less than a larger home. In San Diego, for example, three to four bedrooms, single family detached homes, the median price was $850,000. While for the same number of bedrooms, but under 1,700 square feet, it was $757,000, nearly an average of $100,000 less, which is 12% less the cost. That might just make the difference between what you can afford and continuing to rent. Also, note, the average square footage of these homes is 1,364, still likely 20 to 30% larger than the equivalent apartment. And you also get a backyard, garage, driveway and the ability to build equity and generational wealth.

Speaker 1: 18:04

So I haven't answered the question what size home should you buy? Well, you have to make that choice yourself, but I would remove the minimum square footage filter from your search and look at those homes that others may have passed up. You may just surprise yourself. I've walked through 1,700 square foot homes that felt like 2,200 square foot ones and 3,000 square foot homes that felt like they were 1,000 square feet smaller. I'm seeing a huge influx of 1,500 to 1,700 square foot three and four bedroom homes here in Southern California as new construction homes and their lower cost overall. Plus, they have better energy efficiency, smart layouts and really emphasize communal areas in place of more luxurious bathrooms as an example. Is there a minimum size you should consider And, again, only you can make that decision But I've helped others buy homes that were 700 square feet new.

Speaker 1: 18:57

It's plenty of room for them for where they're at in their lives. They're planning on buying a larger home in the future and keeping that home as a rental property, which is a great long term investment option. So remove that minimum square footage filter and see if maybe those homes might just be a great fit for you. Thanks everybody for listening. I really hope this helped make you think again about square footage. And if you guys want to learn more tips on home buying, head over to our website at FTHBprosecom. We've got all of our podcast episodes available there, articles, newsletter resources, along with our Facebook group, and we've got a few different tools there, like a home affordability calculator. Ken, thank you for your support and happy home buying.