Is a Smaller Home more Affordable

While many people have a specific dream home in mind, it’s important to purchase a home that is safe, well-built, and within a mortgage you can afford.

Housing is where the majority of Americans spend their income, and prices are on the rise. Affordable housing has trended toward smaller homes due to the many associated cost savings. As of September 2024, the median listing price per square foot in Texas is $187, reflecting a 35.8% increase over seven years.

So, what size house is best for you? First, determine how many people will live in the house full-time. Next, consider the monthly expenses for your home, including mortgage, insurance, and utilities. Balancing these factors will help you determine the ideal size for your new house.

Benefits of Buying a Small Home

What exactly is a “small house”? The average house in the United States is 2,500 square feet. Anything below that is considered “smaller.” (This differs from tiny homes, which are generally 500 square feet or less.)</p?

A small house can be an excellent option for those interested in minimalism, energy conservation, downsizing and specifically, first-time homebuyers. Small homes allow young individuals to experience all the responsibilities involved with homeownership without breaking the bank.

Heather Higgins, a New York based designer who frequently handles projects in the 1,000-square-foot range, says, “Requiring less time, energy, and money, smaller living spaces provide greater lifestyle flexibility.”

In addition to freeing up time, smaller homes offer numerous benefits:

• Less debt after purchase: Starting with a smaller home purchase translates into less overall financial debt.
• A lower purchase price allows you to put more money towards your down payment or closing costs, reducing your monthly mortgage and starting you off with greater equity for a potentially lower mortgage rate.
• Easier and quicker to clean and maintain: Smaller spaces require less time for upkeep, like cleaning bathrooms or replacing smoke alarm batteries. Which takes less time to clean: a small or a big bathroom? Which is easier to do: change batteries in one fire alarm or three fire alarms?
• Lower bills: Smaller homes generally have reduced insurance premiums, taxes, and utility costs. Smaller spaces cost less to rebuild so insurance is less, taxes are partially calculated on space meaning reduced rates for smaller sites, and fewer lights equals less electricity used. With less space, you won’t need as many televisions or appliances, saving you money on your electricity bill.
• Cheaper repair costs: Fewer materials mean smaller expenses for repairs, such as roofing or flooring replacements. When weather happens or normal aging of materials, repairs must be made. Fewer elements to fix or replace overall is a big savings!
• Reduced emissions: Smaller homes often focus on energy efficiency and can lower your carbon footprint with enhanced effectiveness of heating and cooling systems that use less energy.
• Faster mortgage payoff: With a lower overall cost, smaller homes can be paid off more quickly.

Small House vs. Big House

Some people believe “bigger is better,” while others have reservations about smaller houses. Below are common hesitations and solutions:

• Limited Storage Space: Creative storage solutions like shelves, under-furniture boxes, and hooks can maximize space. Downsizing belongings can declutter your home. Having a ton of storage space is great, except when you’re storing things that you haven’t used or even looked through in years. Removing less useful items from a home brings a sense of peace while donating them provides someone else with the chance to use the item to its full potential.
• Harder to Host Guests: while entertaining in a smaller house takes a bit more thought, it can certainly be done! is to move furniture, such as tables, to along a wall or into the garage temporarily. For overnight visitors, use folding screens to partition personal spaces and fans for comfort. Hosting in smaller spaces often means less post-party cleanup.
• Room for Kids: children can have a lot of energy! This can mean more movement and noise, all within a shared space. One way to help is to consider the outside as another room in your small home. Yards, parks, and playgrounds are also part of your living space, so take advantage when the weather allows. Within the home, some savvy small homeowners have created little areas that are strictly for play. Going to this area during times of restlessness can feel special and serve as a reward, or just a much-needed parental break!

Buying Smaller Saves More

In 2024, newly built homes got smaller for the first time in decades. Home sizes peaked in 2021 when the pandemic forced many people to work from home and additional space was needed.   According to the U.S. Census Bureau, the average square footage of new housing units dropped from 2,500 square feet in 2021 to 2,300 square feet in 2024.

Stagnant wages, coupled with rising building and labor costs, are driving homeowners toward smaller homes. In Texas, where the minimum wage has remained $7.25 per hour since 2009, economic pressures are significant. For instance, in Houston, a standard no-frills bathroom sink cost $44.24 in 2022 but increased to $48 by 2024.

Less square footage translates into big savings. To calculate potential savings, add up your current monthly housing expenses (mortgage, utilities, insurance, and maintenance). Compare this total to what you’d spend on a larger house by doubling or tripling the amount. The difference shows how much a smaller home can benefit your finances.

Can a Small Home be Luxurious?

A home’s size doesn’t limit its potential for comfort or style. Many no-cost and low-cost strategies can make a small home feel spacious and luxurious:

No-Cost Ideas: Declutter and remove damaged goods.
• Hang curtains higher and wider to create the illusion of larger windows.
• Rearrange furniture into clusters and avoid overfilling spaces.
• Pull furniture away from walls to add visual depth.

Interior designer Dustin Gerken of Dustin Gerken Design says, “One of the most valuable commodities in a residence is floor space. Use the illusion of spatial depth to your advantage by pulling furniture off the wall to add shadow and gradient to the wall behind it.”

Low-Cost Ideas:
• Paint your front door a deep color for added depth.
• Layer rugs for a cozy feel.
• Use silk flowers and replace cabinet hardware for sleek updates.
• Create or thrift large art pieces for open walls.

Visit both Houston Habitat for Humanity ReStore locations to find great deals on beautiful new items for your home. Stock is always revolving to check often!

Is it a Good Idea to Buy a Small House?

In short, yes. Increasing costs and a stubborn housing market have made smaller houses more appealing. While it might not be your forever home, buying a smaller house is a crucial step toward greater financial stability and future housing options.

Everything possible in a large house is an option in a smaller home! First-time homebuyers benefit from lower prices that require smaller down payments and monthly mortgage payments. A smaller home leaves more room in your budget for higher-quality furniture and home improvements. You can invest in durable, long-lasting items rather than cheaper alternatives, saving you more money in the long run. Using creativity and a little bit of the ever-increasing savings made from this decision, the design and feel are completely up to you. Reduced utility costs are also a major benefit –  air conditioning a smaller home during Houston’s summer heat can add up to big savings!

Plus when you get ready to sell your home, you are in a positive financial position. Home prices typically depend on the square footage and size of the house. Smaller homes often attract a broader range of buyers due to their affordability, making them more likely to sell.

Virtually tour some of our Habitat Homes, explore the possibilities, and start your journey toward homeownership today.