Build smaller starter homes. Win Win.
I’ve thought that too. When I did some research I learned why that doesn’t happen. The cost to construct a 2 bedroom home vs a 4 bedroom is only marginally less. This takes into consideration the building lot, materials, zoning and permit costs, and connections to utilities.
A three or four bedroom home will sell for significantly more than a 2 bedroom. To maximize your profit, you build at least 3 bedrooms—even when people don’t need them.
It makes sense from the construction perspective. It doesn’t help from position of being a new homeowner.
The other thing going on is that the country is on the cusp of a massive movement in real estate. Let’s face it, we Boomers are not going to live forever and we hold a bunch of decent real estate. Where is THAT going in 10-15 years?
Is a bank going to lend you money to build thirty homes on that huge piece of old farmland when there isn’t going to be a market for it in 10 years?