Right-sizing your American Dream: An extra bedroom or 1/3rd off the price?

SF: 3BR, 1+BA across MA

On Saturday, one of the Real Estate Cafe’s new clients, a five-person household (husband, wife and three kids under 11) seriously considered making an offer on a two-bedroom condo in Cambridge. When I shared this experience with my adult daughter who also shared a bedroom with two siblings until she was 10, she said, “When we got separate bedrooms, we didn’t like it—so we slept together in the same bedroom, by choice, on and off until 18.”

Surprising (or even shocking) as that may sound relative to rising expectations, 80 years ago two bedroom homes were the norm. So was sharing bedrooms:

“The number of occupants per household was 4.32 people in 1929 while there was an average of two bedrooms—the average recommended by the ASHSB (Architects’ Small House Service Bureau). This means there were over two people per bedroom.”

Between 1929 and 2010, the average size of houses nearly doubled, rising from approximately 1,350 to 2,500 square footage. While the number of bedrooms and bathrooms has increased, the number of occupants per household has almost been cut in half:

“In 1929, the average number of occupants was 4.32 (U.S. Census Bureau, 1940). By 2010, the number of occupants per household was 2.58.”

In recent decades, the number of bedrooms has not increased but home size continues to expand:

The most popular Deck house floor plans in 1980 had three to four bedrooms and approximately 2,130 square feet. In subsequent decades, the number of bedrooms stayed consistent but the square footage increased to 3,684 square feet in 2000;

 The square footage per person in 1950 was about 290. By 2003 it had tripled to 893 and by 2010 risen to 927 square feet.

What are the implications? One paper, The “Growing” American Dream: An Analysis of Historic Trends in Housing concludes:

“The growth in the size of single-family homes has had significant negative impacts on our sense of community among members of society.”

What data does the author present to substantiate that conclusion?

“Almost a century ago, people sought interaction with others outside of the home. Children played outside. Adults interacted in the town square.”

“Now, houses are expected to fulfill every need or want of the family (Jackson, 2006).   …The home has become a fortress that has to contain everything the users need and want, including multiple forms of entertainment – activities that Americans used to participate in outside of the home.”

Do you agree?  Has the bloated “American Dream” come at the expense of community, draining family unity and finances, too?

Perhaps the @Happathon project in Somerville will shed additional light on what makes people happy locally. See our last blog post entitled, Neighbors in a Post-Snowden Era: Would N-Scores increase Happiness?

MLS Update & Financial Implications

During the past 30 days, 10/18-11/18/13, an analysis of MLSPin data across Massachusetts reveals that MEDIAN asking price for a single family home with 4 bedrooms and 2 baths is $434,000 rather than the skewed $511,000 AVERAGE reported by Coldwell Banker in today’s Boston.com real estate blog post.  That $77,000 difference overstates asking prices by 18%. Price reductions during the past month were most common on listings between $500,000 and $700,000.

If buyers are willing to accept a smaller house with 3 bedrooms and 1+ baths, as shown in the table above, they can save $144,000 based on a comparison of the median asking price of $290,000 for homes with recent price reductions. Price reductions are common statewide on 3 bedroom homes priced from $150,000 to $450,000.

QUESTION: Which would make you happier: an extra bedroom or the opportunity to save more than one-third the price of a home?

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Primary Source:  Indented quotes above are excerpted or paraphrased from The “Growing” American Dream: An Analysis of Historic Trends.  Visit that paper online for more detailed references to primary sources.

Posted in Buyer agent, Defensive Homebuying, Luxury buyer agent, Luxury homes, Price reductions, Proactive househunting, Savings & Rebates

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