Smaller Homes Gain Traction Amid Boise’s Housing Shortage
As prices soar, newly built homes are shrinking, offering more affordable options for buyers
With home prices continuing to rise and affordability remaining a significant challenge, the trend in the Boise area is clear: newly built homes are getting smaller. This shift reflects both economic pressures and changing buyer preferences.
The Changing Face of the American Dream
Is the classic dream of owning a large home fading? In Ada County, where home prices have reached record highs, many buyers are now turning to smaller homes in prime locations. Elizabeth Hume, president of Boise Regional Realtors and associate broker at Stack Rock Realty, notes a distinct shift in buyer interest towards more manageable, well-located properties.
“I think people are interested in quality of life now, so they’re more interested in where they’re living and what they can do,” Hume explains. She points out that larger homes come with higher taxes and maintenance costs, while smaller homes free up time for enjoying local amenities like the Boise River.
Economic Factors Driving the Shift
Beyond lifestyle changes, economic factors are also at play. As home prices increase, potential buyers are often unable to afford larger properties. In April 2011, the median price for a home in Ada County was $133,000. By June 2024, that number had soared to approximately $570,000. According to Zillow’s affordability calculator, a household would need an income of about $188,000 per year, with no monthly debt and a $30,000 down payment, to afford a median-priced home. In contrast, the median household income in Boise was around $81,000 in 2022.
Rising Costs and Smaller Homes
The cost per square foot for single-family homes in Ada County has also climbed dramatically. From about $121 per square foot in 2014, it peaked at nearly $306 in 2022, before settling at approximately $291. As costs rise, the size of newly built homes has decreased. The average size of a newly constructed single-family home sold in Ada County has dropped from about 2,380 square feet in 2014 to about 2,258 in 2024.
The COVID-19 pandemic initially saw a spike in larger home purchases as people sought more space for remote work. However, this trend has reversed, with the average size of new builds shrinking. In June, existing homes averaged 2,268 square feet, while new construction homes averaged 2,160 square feet.
Homebuilders Adapt to Rising Costs
Homebuilders are also adapting to rising costs by constructing smaller homes. Increased land and material prices, along with labor shortages and high interest rates, have pushed builders to maximize their investments. By building smaller homes, developers can often fit more units on a single lot, enhancing profitability.
“Prices of land have gone up, and prices of materials have gone up,” Hume says. “Everything is more expensive.” As a result, the market is seeing more compact homes designed to meet the needs and budgets of modern buyers.
The Future of Boise’s Housing Market
As the Boise housing market continues to evolve, the trend towards smaller homes is likely to persist. This shift not only reflects economic realities but also aligns with changing lifestyle preferences. For many buyers, the focus is now on quality of life and community amenities, rather than the size of their home.
In this challenging housing market, smaller homes offer a viable solution for those looking to enter the property market without overextending their finances. As Boise continues to grow, these trends will play a crucial role in shaping the region’s housing landscape.