If you’ve been looking for homes to buy in North Texas, you might have noticed. They sure seem to be getting smaller.
The COVID-19 pandemic saw the hottest housing market in recent history, according to a recent report by Zillow (via Candy’s Dirt). The 20%-plus home value increase and the historic low levels of for-sale inventory caused houses to sell for $1 million (and up) more often than the years before the pandemic. But for buyers, these $1 million homes might look different of what they expected.
Zillow reports million-dollar homes have undergone a shrinkflation. The term refers to a cost-cutting down-sizing tactic familiar to the food and drink sector. In an effort to balance increasing costs and keeping prices low, suppliers opt to cut the product itself. According to Grocery Gazette, for example, Tesco has cut 50g from the weight of its entire range of own-label ready meals.
While this practice has been known for years now (who among us hasn’t bought a bag of air only to discover two potato chips in it?), the housing market seemed to have managed to escape, but not anymore.
According to Zillow, the national median square footage of a million-dollar home in the second quarter of 2019 was 2,900 square feet, with sizes actually increasing leading into the pandemic. Fast forward to the end of June 2022, and the median square footage of a house within that price range went down to 2,624 square feet, a 9.5% decline from 2019.
The report shows that this phenomenon is stronger in some metropolitan areas than in others. In DFW, the square footage for a $1 million home went down by 1,006. According to Zillow, the first thing to go was the bathrooms: “Only four of the observed metros saw the median million-dollar home maintain the same number of bathrooms compared to 2019. The rest lost at least the powder room.”
Another side effect of the shrinkflation is the aging of million-dollar houses. Nationally, the median $1 million home is older today than it was in 2019, and depending on the market could be older.
“Buyers with seven-figure budgets shopping for homes during the pandemic were doing so coming off the longest period of economic growth in U.S. history and with the help of historically low-interest rates,” Anushna Prakash, economic data analyst at Zillow, said in the report. “Sales for expensive homes soared while buyers in the heat of competition accepted smaller layouts.”
Pricey smaller and older houses are now the housing market’s shrinkflation version of puffed-up bags of chips.