Buyers Willing to Give Up Land in Exchange for Homeownership

(Illustration courtesy of National Association of Home Builders)

High mortgage rates and double-digit growth in home prices since COVID-19 are forcing home buyers to compromise on lot size and square footage to afford a house, the National Association of Home Builders reported.

Nearly 4 buyers out of 10 would be willing to give up land in exchange for owning a home and more than a third will accept a smaller house if that’s what it takes to buy it, according to NAHB’s new What Home Buyers Really Want report.

NAHB recently released a 10-point housing plan that recommended local and state governments reduce minimum lot sizes, allow more accessory dwelling units and promote “missing middle” housing (e.g., duplexes and townhomes).

“Missing middle housing can assist in both increasing the number of units built and units available in a wide variety of price points,” the report said.

According to a recent Federal Reserve Bank of New York survey, more than two-thirds of Americans call housing a good investment. Another Federal Reserve survey, which examines household balance sheets, shows that homeownership is key to building household wealth. For families that owned a home, the median net housing value increased from $139,000 in 2019 to $201,000 in 2022, as home prices rose, and home mortgage debt was approximately flat.