RECON, 5/29/09

Home developers nationwide are building smaller homes to match the shrinking economy. A National Association of Home Builders survey of its members found that 90 percent of them are now building smaller, with the typical home size falling by 11 percent in 2008.

Developers cite many factors influencing smaller living space, including increased energy consciousness and empty-nest baby boomers looking to downsize. The strongest motivator is the sagging economy.

A typical single-family home under construction, the most forward looking statistic, peaked at 2,629 sqft during the second quarter of last year, according to the U.S. Census Bureau. By the fourth quarter, it had dropped to 2,335 sqft but rose to 2,419 sqft in the first three months of the year.

The shrinking of the American home coincided with a tightening in lending standards, which reduced the amount of money left for homebuyers. Builders scrambled to shrink their product accordingly.

Forecasts predict that green building in the residential sector will grow from a $7.4 billion business in 2005 to a $38 billion business by 2010.

By Jonathan A. Schein

Here’s some shocking news in a down real estate economy: the green home building marketing could triple by 2012, or in just three and a half years.

The study revealed that this part of the market is moving beyond anything expected. It was released at the National Association of Home Builders (NAHB) Green Home Building Conference. It was conducted by McGraw-Hill Construction and focused on changes in green building activity between 2001 and 2007.

The green building market is definitely on the rise. For example, it is estimated to comprise between $12 and $20 billion of the entire new construction market, or six to ten percent. By 2012, this amount will double or triple to 12-20 percent ($40 to $70 billion).

One surprise the survey showed was that when it comes to building green, quality is now as important as pricing. The choice of green construction is not simply about affordability, it’s about the ways it will impact a home buyer’s quality of life. In other words, going green is quickly becoming a “lifestyle” choice as well as a commitment to sustainability.