American Homes Are Getting Smaller and More Expensive

Estimated reading time: 3 minutes

Shrinkflation isn’t just for candy bars anymore. A new study found that the median U.S. home is getting smaller and more expensive too.

The average home has 128 fewer square feet than in 2019 and costs $125,000 more, according to research from USA TODAY Homefront. That’s a price increase of 52% and a square footage decrease of 6%.

While mortgage rates have been cooling, they’re not likely to return to the record lows of recent years anytime soon, meaning potential homebuyers will likely face higher prices and mortgage payments for less space.

Where Are Homes Shrinking?

There aren’t many places you can go to escape home shrinkflation. Out of 150 metro areas, square footage increased in only 18 of them.

Homes shrunk the most in the area around Colorado Springs (21%), followed by Charlotte, North Carolina (20%), and New York City (19%). Conversely, square footage increased by 11% in the Davenport–Moline–Rock Island area in Illinois and Iowa.

Meanwhile, the price per square foot increased the most (88%) in the Naples-Marco metro area of Florida. Over the last five years, New York City area homes not only saw a massive drop in square footage, but also the second highest price increase (82%).

The Road Ahead

Conditions for prospective home buyers have changed a lot over the past few years. But there are things they can do to make their home-owning dreams a reality. As so often, it starts with a budget, or in this case, knowing how much home they can afford. Then they can make plans for a down payment, get preapproved for a mortgage, find a real estate agent, and then start looking for a home.

Unfortunately, for those waiting for home prices to meaningfully come down, economists don’t believe that’s very likely. Experts cited by MarketWatch don’t expect dramatic price changes, even if interest rates go down, because there aren’t nearly enough homes to match the demand.

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