Thursday, September 30, 2010

Social Expectations and Housing Market Moves

It is the rare household that chooses a house based mostly on a thorough rational assessment of what kind of living space they need. The selection is likely to be influenced more by self-image and perceived peer pressure. It is hard to buy a much smaller or larger house than everyone says a person like you needs. You are boxed in by a web of social expectations, many of which are media creations, unless you consciously choose to step out of the box.

When there was a trend toward larger houses, a great many people followed that trend, in varying degrees. And now that the trend is toward smaller houses, they will follow that too.

At the least, the social pressure for a million-dollar household (or one of more modest means) to buy an oversized house has all but vanished. People who find themselves living in one of these big houses will make up excuses for the extra rooms. The excuses serve as a way of saying, “We realize this house is too big for us, but we have to settle for what we have.” Some people may make a part of their house disappear by installing a door in front of a section of it and leaving it unheated in winter — or perhaps renting it out, in situations where local laws and lifestyle considerations permit this.

A downsizing trend can never be fully recognized by the mass media, which always seem to favor the larger, brighter, more controversial side of everything. Not many reality TV shows are going to be placed in an average-sized house. Still, the media is fond of trends and has wasted little time pointing out the trend toward smaller houses.

Heating and cooling costs, time pressure, and a new financial realism are three of the primary reasons why house sizes are trending down. Social expectations and media images are secondary reasons, yet they may amplify the trend beyond what anyone is expecting at this point. There are just two more components of the downward pressure on demand for housing.