According to new research, the rising price and short supply of land is limiting the share of one-story floor plans. These homes are selling at an average 10 percent price premium compared to two-story homes.
Stronger demand for one-story homes has been attributed to the large population of homebuyers aged 65 years and older, a group that will grow 38 percent by 2025. Survey data from John Burns Real Estate Consulting reinforces its latest research, showing that 51 percent of over 22,000 new home shoppers would prefer a single-story home. The company's latest report concludes that one-story homes will continue to have price premiums, and sales velocities will increase due to an expanded buyer pool of people who prefer one-story homes.
Direct construction costs tied to the larger footprint of the floor plan (e.g., larger foundation, roof, etc.) increase expenses for a single-story home by about 3 to 8 percent compared to a two-story home. The smaller size of single-story homes stemming from lot constraints decreases revenues and puts a strain on margins. So those high land prices and limited developable land ... mean builders favor two-story homes even if that results in a disconnect with their buyers.
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