‘Shrinkflation’ is making American homes smaller yet just as expensive

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The average new home is getting smaller, but don’t expect a discount.

Even though soaring construction costs force builders and architects to employ clever design tactics to maximize space, home prices continue to climb, leaving budget-conscious buyers caught in a squeeze.

According to a July report by John Burns Research & Consulting (JBREC), budget-conscious builders downsized about a quarter of new homes last year. Yet, new home prices jumped 2.5% in 2023, peaking at nearly $441,000 in August.

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Experts say this could mark the beginning of the end of the starter home.

“To get a lower-priced home built under $300,000, you’ll either have to build a smaller home or homes in a higher-density setting,” said Ali Wolf, Zonda’s chief economist in an interview earlier this year.

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Designers are now four times more likely to plan for smaller homes than larger ones, according to JBREC.

https://creditnews.com/economy/shrinkflation-is-making-american-homes-smaller-yet-just-as-expensive/