USA Today is reporting a decline in the size of new homes being built (the first significant decline in over 30 years), citing multiple sources and surveys. Homes started in the 3rd quarter of 2008 averaged 2,438 sq ft, compared with 2,629 sq ft in the 2nd quarter.
My guess is that this trend will continue, as the current economic environment is affecting people's core beliefs about conservation and excess. This is especially apparent after the fast-paced, bubble-after-bubble, bigger-is-better mindset of the late '90s and early 2000's.
Personally, I've met too many people who are struggling to keep up with a bigger house than they need, which they bought just because they could, or because everyone else was doing it. These folks talk about simplifying their life and their finances. "Fool me once, shame on you. Fool me twice, shame on me." Few people who struggle through this process will allow themselves to do it again.
Your somehow survived growing up in a family of 6 in a 3-bedroom home Realtor,