It started as a drumbeat last March, as Candace Taylor of the Wall Street Journal wrote that Baby Boomers who built million-dollar, large homes, suddenly were finding it difficult to unload them because Millennial buyers (the next market of age to buy a home after Gen Xers) were disinterested in (or couldn’t afford) the homes.
Seems Boomers, who are looking to retire and downsize, and Millennials have something in common — a slim-to-nil desire to live in too much house.
“Large, high-end homes across the Sunbelt are sitting on the market, enduring deep price cuts to sell,” Taylor wrote. “That is a far different picture than 15 years ago, when retirees were rushing to build elaborate, five or six-bedroom houses in warm climates, fueled in part by the easy credit of the real estate boom. Many baby boomers poured millions into these spacious homes, planning to live out their golden years in houses with all the bells and whistles.”
The Boomer generation owns about 32 million homes and account for two out of five homeowners in the country.
What nobody accounted for, really, was that tastes would change, and the buyers entering the market in the mid to late 2000s would be looking for walkable neighborhoods, energy-efficient homes, and clean floor plans, for the most part.
“Design trends have shifted radically in the past decade,” Taylor wrote. “That means a home with crown moldings, ornate details and Mediterranean or Tuscan-style architecture can be a hard sell, while properties with clean lines and open floor plans get snapped up.”
The other issue? Millennials can’t afford large homes with large price tags. Millennials buying their first home nowadays are going to pay almost 40 percent more than the Boomers did when they bought their first home in the 1980s, Business Insider reported. Millennials are also looking at a record amount of student loan debt, which also hampers their ability to take on a large price tag.
Back in the Day …
That large home thing? It is a more recent trend. According to Census Bureau statistics, the median size of a new home built in 1973 (when the bureau started tracking home sizes) was a little more than 1,500 square feet. By 2015, it was 2,500 square feet.
According to the American Enterprise Institute, in 1973 each new home had about 507 square feet per resident. Forty years later, that would almost double.
And the larger homes aren’t necessarily making us any happier, either. According to a recent paper by Clément Bellet, a postdoctoral fellow at the European business school INSEAD, despite the trend for larger houses from the 1980s on, home satisfaction rates have not increased as the square footage has.
“I find that new constructions at the top of the house size distribution lower the satisfaction that neighbors derive from their own house size,” Bellet wrote.
“Since 1980, however, house size inequality has widened, driven by the construction of ever bigger houses at the top of the size distribution,” Bellet continues. “In 1980, only 5% of new-built houses were larger than 3,000 square feet; on the eve of the 2008 financial crisis, these ‘McMansions’ represented 15% of new constructions and the largest 10% of all homes were about four times bigger than below-median houses, compared with a factor of three 30 years before.”
Bellet’s paper, which matches homeowner satisfaction scores with existing home size data, examines the impact of the age-old “keeping up with the Joneses” phenomenon.
Basically, people are pleased with the size of their home, until someone builds a larger home within the proximity of their home — so the satisfaction doesn’t last if bigger, newer, better homes pop up nearby (which is almost a guarantee in teardown-happy Dallas).
What About Dallas?
How does Dallas fare when it comes to Millennial homebuyers? In a 2017 study by ABODO.com, Dallas got about a B minus (or the equivalent) at best at 28.7 percent, compared to the national average of 32 percent, ranking 32 out of 45 in terms of having the most Millennial homeowners.
To get an idea of what kinds of inventory is out there, we took a gander at Realtor.com, and searched for listings that are 3,000 square feet or fewer.
In Dallas proper, there are roughly 4,400 homes listed that are 3,000 square feet or fewer. Of those, a little more than 1,300 have been on the market for a month. Reduce the days on market to 14, and 648 are listed. That number drops to about 240 when you reduce the DOM to seven days.
About 650 of those 3,000 square foot and fewer homes are new construction.
Floorplan Over Square Footage
We reached out on social media to ask our readers about their homes — and what they’re seeing.
Many said that more important than square footage is a reasonable layout.
“I would take a good floor plan and land over a big home. Our house is 2,500 square feet and my primary complaint is that my master suite is way too huge and that square footage would have been put to much better use in our living room or kids bedrooms (which are flipping postage stamps),” Jackie Spivey told us. “I wish they used space better, I guess is my primary issue. I’d give up a formal dining or second living room in exchange for a bit comfortable living room and bedrooms the kids can grow into.”
“I feel like moderate-sized homes are so much more concerned with the list of rooms they can tell you (we have three attics but no linen closet?), and the massive master suite that we spend almost no time in.”
Realtor Camile White agreed. “I don’t think builders are putting enough space into bedrooms. I toured a custom built home and I would have used some of the open space differently.”
“I just put an offer on a home that is 2,300 sqft and has no formal living or dining, which I always thought were such a huge waste of space,” Andrea Harris said. “This home has four bedrooms which is perfect because that’s a bedroom for each of us plus a guest bedroom or an office. The only extra space that has is a loft area which is definitely needed because the boys have a lot of toys that I don’t like keeping in their rooms due to sleep patterns at this age.”
Harris said she felt that she had found a place that was the perfect amount of space for her family.
Connie Carr said that her needs are pretty simple, too. “I would much rather have a one level with a great floor plan and zero lot line. No desire to maintain a yard,” she said.
Andrea Perkins can’t quibble with the size of her home but does agree that a better layout would make her even happier with it.
“It amazes me that generations raised their families in homes like my 1956, 1,780 sq ft ranch without a hitch — yet current homebuyers feel the need to tear them down to build giant homes/McMansions on the same lot,” she said. “In our case, the size is fine (family of three and one dog) but I wish the layout was different. I really don’t want more square footage to maintain, but I’d love a more efficient use of the space that’s here.”
“More is not necessarily better. I’ll take smart use of a smaller space over more square footage any day,” she added.
Christy Tull told us she’s firmly in the downsizer ranks now. “The older I get the smaller home I desire. I think knowledge comes with age, at least for me. I’ve owned 6,000 sq ft to my now 1,300 sq ft.”
Just a scoosh past the Millennial age at 38, Hillary Shane said that her family has downsized and she’s quite happy with it.
“First house was 2,800 sf. A bit big when kids were little but would have been great now,” she said. “The second house was 3,600 sf. I HATED IT. Mind you, I grew up in a house that size but it’s different when you have to do everything!”
“Our current house is 1,800 sf – 4 bdrm, 2 ba, 2 liv areas, eat in kitchen and dining area — kids call it ‘the shoebox’ and I call it pretty damn great — not as much crap to clean, lower bills all around, and I actually see my kids a few times every day.”
A response on Twitter also showcased that just because you have a family, doesn’t necessarily mean you want a big house.
Were 38 and 39 with a 7 and 2 yr old, so not quite millenials, but…
We sold our 4/2.5 2,088 sq ft house last yr. Took a 14-month RV trip. Now back in the rental market and we won’t consider anything over 1,250 sq ft. We’d like to stay <1,000.
— Donito (@Biggio4HOF) July 8, 2019
The Millennials Weigh In
Sure sure, but what do actual area Millennials think? Turns out, it depends, and much like life, it kind of depends on circumstances.
“As a full-blown millennial I can say with certainty my goal in life is to be uber-wealthy with a house under 2,000 sqft,” Hannah Hargrove-Roberts said. “That being said, it seems that others in my peer group (especially in my neighborhood) are all about the zero lot line life. Last week two houses on my street were torn down. Both houses needed work but their only real crime was being tiny.”
“I just don’t understand why anyone would want to spend $900,000 on a house in my ‘hood. Don’t get me wrong, Lake Highlands is a nice neighborhood, but if I had $1,000,000 to spend on a house I wouldn’t be buying in a neighborhood where the majority of homes fell under the $350,000 range.”
“Millennial here, and I think McMansions are gross. I prefer a small but nice home in a decent area,” said Megan Reeves. “IMO minimalist living is practically becoming the new ‘status symbol’ for my generation and the upcoming Gen Z.”
“My husband and I intend on staying in our ‘starter home’ size home in the neighborhood we grew up in, in an effort to keep our area great for our kids,” said Shannda Langston. “Plus we would rather have a small home and add a vacation home than have a home that is too big once our kids move out.”
“My husband and I are millennials with two young daughters in a 1,200 square foot house in Casa View, raising two daughters with no intentions to leave,” said Carrie Jean Reese. “We love our small home! I will say, we are having a tiny home put out back, but it’s strictly due to work from home obligations.”
Voice of wisdom Cooper Koch said he was pretty sure affordability was the bigger factor.
“The millennial kids who work for me only don’t pick bigger places because they can’t afford them,” he said. “Given the chance, they’ll take a big house just like the rest of us.”
Rachael Armstrong agreed. “I’m a millennial and we’d love to get a larger house (currently in a 2,200 4/2). We’d like a five-bedroom so each boy can have his own room plus a playroom,” she said. “No need for a media room or formal LR/D, though.”
Reeves also pointed out the affordability factor as well.
“And let’s not forget that even just being able to afford a home at all can be a struggle for people my age, so in a way smaller becomes a necessity,” she said.
But we also heard from Millennials who have had a chance to try on several sizes for fit, and have come back to something “just right.”
“We had 2,500 sq. ft. and it was too much (4/3 with two living and two dining),” said Rebecca Duncan. “So we downsized to 1,500 sq. ft. and found it was not enough (3/2.5 with a formal dining but only one small living room). We recently moved to a house with just a hair under 2,000 sq. ft. (4/2 with only one living and dining but the space is used so well) and I feel like Goldilocks.”
Duncan, who lives north of Dallas, said that the influx of new homebuyers from California thanks to corporate relocations such as Toyota have also perhaps skewed the trend in North Texas a bit, too.
“Up here the McMansions are super popular with Cali transplants who sold their tiny houses and came here to find they can afford houses with rooms no one needs,” she said.
“We downsized by 600 sq ft (now 1400 sq ft) and love it!” said Grant Myers. “As long as we’ve got a roof and a yard for the pups, we’re good to go!”
Maegan Lunte, a transplant from Chicago, said that when she arrived in Dallas, she was over the moon about what she could afford.
“Millennial that moved from Chicago to Dallas with wide eyes. Sold in 2015 a 1988 1900 sq ft 3/2.5/2 that we remodeled in Chicago for $150/sq ft,” she said. “Built in 2015 a semi custom, 3,800 sq ft 4/3.5/3 for $97 sq/ft. We felt like we won the lottery. Put in the rock face turret and all!”
“Four years later and I never use the upstairs,” she said. “My three kids have a ridiculously sized playroom, which is so not needed. I do miss our smaller abode where everything had a place and was easier to clean and maintain.”
And while she doesn’t hate the size of her current home, Trisha Blodgett said she wouldn’t turn her nose up at something smaller, either.
“My husband and I bought a house two years ago that’s 3,200sft (definitely not a McMansion, but still a larger family home),” she said. “I think it’s the perfect size for our family of five, but I wouldn’t mind something smaller either.”
What Realtors See
“The listings in my office — I see the McMansions sell faster, but they are bigger nice homes in an affordable price range,” said Mary Katherine Spalding with Helen Painter Group. “Granted, several of our agents are helping many people coming to attend the Bible College that Kenneth Copeland started so they are buying in the Lake Worth, Azle, Eagle Mountain Lake area.”
“But unless you’re on the lake the land, space, and home features are more attainable. I work primarily in southwest area of Fort Worth. Most of the homes I work with are under 2,000 and that’s about the size most of my friends want,” she added. “I live in 76109 right around TCU and homes are in the market for a while.”
Spalding said that she’s seeing a lot of her friends purchasing older, even distressed properties, and not necessarily because of price, either.
“Millennials (my friends from high school and college specifically) are buying the run-down homes and updating them over time because they don’t want cookie cutter or oversized even though they wouldn’t have to update for a similar price,” she said.
Kristann Connerly, a Realtor with the Jessica Hargis Group, agreed with Spalding.
“We prefer the most functional home. We already downsized by 1000 sq ft and we’re ‘young,'” she said. ” We got a pool and we have a couple acres, so we went up in price and got something totally different and smaller.”
“As a Realtor, people want the function, not size, and cool factor/character,” she added. “I’ve had a few clients tell me lately they’re glad the houses we’re finding don’t have wasted space like oversized entryways or long halls.”
“I’m a Realtor in northern Ellis county average sq ft sold is 1,900-2,400,” said Pamela Vaughn with Fathom Realty said. “County newcomers are more interested in larger yards, which average ½ an acre here.”
“I’m seeing new build floorplans with smaller square footage, no wasted space, outdoor spaces, and one story,” said Sarah Renwick of HomeInsiders with eXp Realty.
So where do you land? Big house, medium house, small house, tiny house? Realtors, what are you seeing? Let us know in the comments.
To read Taylor’s article, click here.