The decade's most triggering comedy
The size of the typical apartment in the United States saw one of the largest declines in recent years as inventory remains constrained.
The average size of new apartments was 887 square feet in 2022, constituting a 3% drop since the previous year and a decline of 54 square feet over the past decade, according to a recent report from RentCafe. The apartment search company noted that higher demand for housing prompted the lower unit sizes.
“With one of the highest levels of construction in half a century, the year was marked by the need for more housing all across the country,” the report said. “As such, more studios and one-bedroom apartments were finished in 2022 than ever before.”
The years marked by the lockdown-induced recession witnessed a modest increase in the size of new apartments from 910 square feet in 2019 to 917 square feet in 2021. Demand in real estate markets pivoted toward a desire for larger properties as families spent more time in their homes and breadwinners relied more on remote work. Developers offered a “quick response to the need for more space” and adjusted floor plans to “accommodate large enough configurations to fit a home office.”
Silver Spring, Maryland, has seen a 15% decline in average square footage over the past decade, surpassing all other metropolitan areas. Portland, Oregon, saw a decline of 9%, while the New York City boroughs of Queens and Brooklyn each witnessed 7% declines.
Other metropolitan areas, on the other hand, are witnessing trends toward larger apartment sizes: Tucson, Arizona, and Tallahassee, Florida, saw 29% and 16% respective increases in average square footage. Cities such as Mobile, Alabama, and Lubbock, Texas, followed suit with 17% increases in apartment size over the past decade.
Volatility in the real estate market occurs as supply chain bottlenecks and labor shortages persist beyond the lockdown-induced recession, worsening overall inflationary pressures in the global economy. Average rental prices have increased 26% from $1,568 in December 2019 to $1,981 in December 2022, according to data from Zillow.
The overall housing market witnessed a shortage of 3.8 million properties as of 2019, according to data from the government-backed mortgage company Fannie Mae. The National Association of Realtors estimates that homebuilders should have constructed between 5.5 million and 6.8 million more houses over the past two decades to match current demand.
Increasing mortgage rates recently produced the first year-over-year decline in median home prices since February 2012, even as properties become less affordable due to the high interest rates. Median home sale prices had increased from $322,600 in the second quarter of 2020 to $467,700 in the fourth quarter of 2022, according to data from the Department of Housing and Urban Development. Costs plateaued in the second half of last year as mortgage rates soared.
Actions from the Federal Reserve to decrease the target federal funds rate to stimulate the economy during the recession had produced historically low mortgage rates. Homeowners who acquired mortgages at favorable rates have reason to avoid selling their properties given current market conditions, a phenomenon that could further limit the number of houses available for purchase and decrease affordability for buyers.