Robert Lanter is the perfect example of the many Americans struggling to afford and own housing in today's economy. Lanter moved from Portland to central Oregon and struggled to find an affordable home. For Lanter, living in a condominium or renting a home were out of the question. His 600-square-foot home was one of the few homes he could find under 300,000. And Robert Lanter is not alone. Caleb Rodriguez, a 22-year-old from Texas, recently moved into a community of mini homes, which range from 350 to 500 square feet. The homes do not have a garage and each driveway is just large enough for a single car or two motorcycles. While many people would prefer grander establishments, for numerous Americans, mini houses are becoming a clear choice over an expensive mortgage.
Last year, interest rates on a 30-year fixed-rate mortgage rose to the highest they've been in two decades-just around 8 percent. While mortgage rates have fallen this year, it appears that many people are moving towards smaller homes and even studio apartments. The concept of "starter homes" is no longer the norm for first-time home buyers and neighborhoods that used to be accessible are being gentrified. The increase of the trend of small homes is slow moving but the National Association of Home Builders among others, has indicated a movement toward more compact housing units. There is a strong desire for homeownership, but no longer a desire to pay the high price of land and buildings. Many state and local governments are endorsing this push for smaller homes and have passed bills making it easier for builders.
While the mini houses have shown a solution to this issue in the housing market, there is still something creating a problem for potential first-time home buyers with families. In the 1960s the median American home was 1,500 square feet and today it is 2,200 square feet. Many Baby Boomers no longer have children living with them but are in these huge homes, while newer families are forced to live in compact homes or condominiums. So, while smaller homes are better for singles, empty nesters, and couples without children an affordable solution for millennial couples with children has yet to be discovered.
Link to Article: https://www.nytimes.com/2024/02/17/business/economy/the-great-compression.html
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