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Smaller Spaces Are in Demand

Could you live in a “tiny home?”

Across the nation the trend of “smaller spaces” is growing in the real estate and property management industry. In the past year, the City of Ann Arbor even met to go over a proposal to implement a “tiny home village” outside of downtown.

In Ann Arbor, energy efficiency, a smaller eco-footprint and price are driving the demand for these smaller spaces.

Smaller new homes are in high demand in today's market.
Smaller new homes are in high demand in today’s market.

Boomers lead the charge in buying smaller homes

Good things come in smaller packages. At least that’s the feeling today among many homebuyers, who are increasingly interested in smaller spaces instead of the gaudy, sprawling homes that were popular in the ’80s and ’90s. Many agents believe that smaller homes are more in demand because the Baby Boomer generation is starting to downsize. Boomers no longer need four or five bedrooms and are looking for spaces that are more in tune to their lifestyles as empty nesters.

In fact, a little over 60% of all U.S. households are comprised of just two people or less according to the U.S. Census Bureau. While affordability is the No. 1 driver for this trend, other factors do play a role, as buyers are more concerned with how much they will be paying each month on their energy, water and heating bills.

Smaller homes can make your wallet larger

Conservation is the new watchword in new-home building and existing home sales, as buyers want to conserve their larger down payments and their future dollars by buying homes they need, not homes that impress the neighbors.

“You can add better insulation, new windows and insulated doors, but nothing saves energy like a slightly smaller home,” said Danny Gough, an energy auditor for the consultant firm, Energy Solutions, based in N.C. “We have seen an interest in smaller homes because of this.”

Needs vs Wants

“People are looking beyond what they pay in principal, interest and taxes and look closer at what they will be paying each month,” said Stephen Melman, director, Economic Services, Economics and Housing Policy for the NAHB. “Buyers, despite excellent prices and low interest rates, are cautious and are going to purchase the home that they need and not necessarily even the home they can afford. They are very careful.”

“People are asking what they can truly do without,” Melman said. “Almost 50% of buyers surveyed said they would be willing to give up the living room if affordability is an issue.”

A fast moving trend

One of the model homes created by University of Michigan’s STAMPS students.

This trend has developed quickly. At the beginning of 2007, the median floor area of new homes started was just over 2,300 square feet. The median floor area of new homes dropped to nearly 2,100 square feet by the end of 2010. “That’s close to a 9% decline in floor area over a very short period,” Melman said. “Total floor area isn’t what’s important there, but the amenities inside the home

Rooms that are falling out of favor in new homes include media rooms, sunrooms, mudrooms and libraries. Echoing entryways, vaulted ceilings and giant pantries are also less popular. The report even said that the living room is dying out and will either vanish, merge with another room or become a smaller parlor.

Micro-homes and even micro-apartments are becoming a solution for those with a high demand for a small space. These micro-apartments can have as little as 300 total square feet. Ann Arbor’s city council is still in the debating period of a proposal to build a lot for “micro-homes” to be stored.  Inspired by a project from the University of Michigan’s Stamps School of Art and Design, these homes would have a total square footage of 80 feet.

Whether you’re looking to buy a tiny home or move into a mansion, we’re ready to help.

We are your Ann Arbor real estate experts, call us today!

We cover all of Washtenaw County including Chelsea, Dexter, Ypsilanti, and Saline. Call us at 734-747-7500 or 734-747-7700. We’re also available via email at

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