It appears that the appeal of huge luxury homes in South Florida has come to an abrupt end. Recent South Florida sales figures indicate a trend towards buying smaller homes regardless of income. Even the wealthy are buying smaller homes instead of purchasing mansions to display their affluent lifestyles.
The average size of a new single-family home last year was 2,215 square feet compared with 2,277 square feet in 2007 according to the U.S. Census Bureau. Although this reduction may not seem like much, it's the first significant size reduction in over 14 years. It's just one more indicator of American consumers trying to tighten budgets and control spending.
While this downsizing trend is happening throughout the nation, it seems to be especially prevalent in South Florida. Even traditionally affluent communities like Delray Beach, Boca Raton and Fort Lauderdale are feeling the pinch. These 3 communities have over 2,000 listings for homes priced between $500,000 and $19 million. There are almost 30% more high-priced than low-priced homes in these communities and many of the higher end properties have been on the market for 6 months or longer.
Even affluent buyers with vast resources are now purchasing smaller homes, leaving the high-end market with unsold inventories. Below you can see how even a well-known luxury community like Boca Raton is being adversely affected:
The Royal Palm Yacht Club, one of the most expensive subdivisions in the U.S., currently has 73 homes (all over $1M) languishing on the market.
St. Andrews Country Club, where a golf membership costs $125,000, has 59 properties worth over $1M for sale.
The Oaks, a highly desirable community, has 36 homes for sale at $1M or more.
The current recession has changed many consumers buying habits, especially in real estate. The tax savings alone allow the buyer to have thousands of extra dollars for investment or to pay for a college education. Only time will tell if the McMansion market returns or if downsizing is the wave of the future.
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