In the wake of the housing market collapse, a number of prospective buyers were forced to wait on the sidelines for conditions to improve. Many consumers that were active during this period opted for basic homes, but as the economy gains momentum, larger homes are starting to become popular once again.
Currently, the average size of a house under contract is 2,079 square feet, according to a report from KB Home. This is a 13 percent increase from last year. In addition, the company says that the number of buyers interested in homes exceeding 3,500 square feet is also growing.
"There's no doubt we're a lot larger than we were a few years ago," KB Home president of the Southern California division Steve Ruffner told the Wall Street Journal.
Another indicator that buyers are shedding frugality and opting for larger properties is that the average size on new homes built in 2011 grew to 2,480 square feet. This was an increase from 3.7 percent in 2010 and was the first year-over-year gain since 2007.
Property values appreciating
Meanwhile, this increased demand for larger homes has also helped to stabilize property values. Real estate data shows the average sales price in April increased to $282,600 from $268,900 a year earlier, according to the Department of Commerce. Although this is a considerable improvement, it is still well below the average price of $329,400 at the housing market's peak.
This pairing of affordable home prices and an increased interest in large properties could help ease economic strains currently being felt through the housing construction sector. Last year, builders sold just 306,000 new homes, which is the lowest number recorded since 1963.
Affordability at an all-time high
Conditions continue to weigh heavily in favor of buyers. The current relationship between mortgage rates, median household incomes and property values pushed housing affordability to a record high earlier this year.
Mortgage rates reached new all-time lows during the week ending June 7, which significantly contributed to the affordability of making the transition to homeownership. Specifically, the rate for a 30-year fixed-rate mortgage averaged 3.67 percent, down from 3.75 percent a week earlier, according to a report from Freddie Mac. In addition, the average rate for a 15-year FRM dipped to 2.94 percent. This was the sixth consecutive week mortgage rates fell to new lows.