Is The Economy Making People Downsize Homes?

Posted By: Madeleine Brooks

The United States economy is going to get increasingly worse before anyone sees an improvement to move out of this recession. What does this mean to the average home-owner or potentially new home-buyers? Lately people have been saying that a larger home is not always a good home. Research has shown that builders are making homes that are smaller in size than ever before. The average size of a home in the third quarter of 2008 was 2,438 square feet down from 2,692 square feet the quarter before.

What does this say? People now are not downsizing their homes but more so "rightsizing". Home owners are selling their larger homes to economize by purchasing a home that does not waste unused space and better fulfill their needs. Gayle Butler who is the editor-in-chief of Better Homes & Gardens conducted a survey and thirty two percent of people who took the survey expect to their newest home to be smaller than the one they are currently living in. The people who took the survey were a combination of current home owners as well at 733 new home buyers.

Builders in this case are responding to the needs and desires of the potential home buyer by building more economy-sized homes, so fewer large homes and more adequate sized. Home buyers/owners are wanting a larger family room that can accommodate a playroom section for the children as well as a gym for the adults.

All you see on television, newspapers and the radio is foreclosures on homes. It is assumed that the economy has made it hard for people to afford to maintain a large home as well as pay off the mortgage that goes along with that home. It makes sense that people would be "rightsizing" to save money and to live more comfortably.

References:
http://online.wsj.com/article/SB123301406083917547.html
http://online.wsj.com/article/SB123672707657288607.html?mod=sphere_ts&mod=sphere_wd
http://www.marketwatch.com/news/story/kb-homes-results-show-smaller/story.aspx?guid={AB9A61C6-48B9-457F-A555-66BCD5182FB1}&dist=msr_9

Housing Stimulus Bill

By Jin Zheng

The housing stimulus bill has been approved by the House of Representatives and is now being decided on by the Senate. Among the things to be discussed by senators from both parties will be how to encourage home sales and help home owners who are on the verge of losing their homes. As a result, there will be a lot of things that needs to be discussed in order for the bill to be passed.

One of the idea is that Republicans want to offer a 30 year fix rate mortgage at 4% for a limited period of time and only individuals with good credit is able to get this loan; this will be government backed as the government will be making up the difference in the rates. This will fix banks by fixing consumers but it will be very expensive, especially if the mortgage rates increases.

Second idea is expanding the home buyer credit. Currently, there is a temporary $7,500 first time home buyers credit proposed in the bill but Senator Kent Conrad, who is Senate Budget Committee Chairman, wants to expand it to make it apply to all housing purchases. In addition, it is desired that the credit is increased to $15,000.

Another idea would be to allow foreclosures to be postponed for 90 days. This is to allow individuals who are about to lose their homes to keep their homes for an additional three months. As a result, the home owners can find a way to keep their homes by working with their mortgage providers. If this bill does get passed, home owners can see lower mortgage rates and provisions to help them keep their homes. Home buyers, on the other hand, can receive tax credits.

http://money.cnn.com/2009/02/01/news/economy/Senate_stimulus_housing/index.htm?postversion=2009020210

http://money.cnn.com/2009/01/29/real_estate/tax_credit_near/index.htm?postversion=2009012917

http://www.google.com/hostednews/ap/article/ALeqM5gFSu3GqniGVvNSQKACosXSPETSNwD963NO000

Mortgage Rates Lowered to 4.5%

Jin Zheng

By Tami Luhby

Reducing mortgage rates to a historically low 4.5% may entice some homebuyers out of the shadows, but it won't be enough to really spur housing sales, experts said.

Only a week after the Federal Reserve unveiled a $600 billion plan to reduce mortgage rates, the Treasury Department is considering adding to the effort to lower rates even more. Both moves are intended to get more buyers into the market in hopes of stabilizing home prices and reviving the economy.

While Treasury officials are keeping mum about the latest proposal, lobbyists said Thursday it is aimed at reducing rates to 4.5% only for people buying homes. Those looking to refinance would not qualify.

There's no doubt, experts say, that the government needs to provide incentives to homebuyers.
Until now, all efforts were focused on addressing the record number of mortgage delinquencies. This should remain the priority, experts say, but it should be coupled with increasing demand for homes.

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Housing Market Predictions in 2009

Jin Zheng

By Elizabeth Rhodes

Summing up the 2008 housing market, Glenn Crellin, was succinct:

"Challenging at best," said the director of the Washington Center for Real Estate Research at Washington State University. "We clearly have a situation where consumers have exited the market, rightly or wrongly, on the presumption that housing prices are going to fall precipitously and they'll be able to get tremendous bargains if they wait."

Will they?

Truth be told, that's too simple a question. Too many things that affect housing are in play for there to be a simple answer. Foremost among them are the deepening recession, the condition of the mortgage market, and the new administration's plans to stimulate the economy.

Here's a look at what 2008 brought and 2009 may bring.

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