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Friday, October 27, 2017

California Home Prices Ushering in Smaller Homes

With California's housing in short supply and homes so unaffordable, architects and builders are scaling down home sizes for lower-income renters, buyers, and senior citizens.

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Many site builders are quoting new home prices in the $300 to $600 a sq ft which is unimaginable to buyers in most of the other regions of the country.

The housing industry calls them ADUs: "accessory dwelling units"-- tiny homes and "modular" housing units that cover a very few hundred square feet.

People can move into them as primary residences or put them on their property to rent out, for extra income.

Prices for the tiny homes can range from as low as $15,000 to $60,000 -- well below San Diego County's most recent median sale price of $550,000.

For recent college graduates, senior citizens, and homeowners looking for rental income, the affordability factor would have the appeal that current market conditions don't.

"The land is really the problem that we have," says Philip Bona, San Diego chapter president of the American Institute of Architects. "And we somehow need to stabilize the land cost so that they carry for about ten years at the $550,000, so that the jobs and the salary markets like that have a chance to come up and meet it, maybe in a decade or more."

Washington, DC, Boston and many other major population areas in the East are or will soon be facing similar housing shortages. Commutes of up to 2-3 hours are not uncommon and finding housing as far away from these metro areas of 70 to 100 miles is becoming the norm.

Adding to the problem are Millennials finding high tech jobs, having good incomes while trying to pay off student loans, find affordable housing close to other Millennials and their work. These smaller homes could be the future for the majority of single family dwelling units beginning very soon.

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