First Person: The Average U.S. Home Size Is Shrinking, Including Ours

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A recent MSN Money article noted that the average home size in America is finally shrinking. While personally it's still larger than I feel most people really need, I think it's a step in the right direction in getting the American public back on the track to a little financial restraint. According to the article, nearly 75 percent of builders comprising the National Association of Home Builders feel that by 2015, the average US home will have fallen from its current size of 2,438 square feet to 2,152 square feet.

While this might not be a huge jump, it's a sizeable difference; however, it's still almost three times the size of our current home. If this trend of downsizing sticks though, Americans might begin to realize what our family has already discovered -- a smaller home can be a cheaper home.

Mortgage Differential Between Big Home and Little

Our first home was a four bedroom, two bathroom layout that came close to the current national average of around 2,400 square feet in size. However, including property taxes, homeowners insurance, mortgage principal, and interest, and our monthly payment breakdown looked something like this:

  • Mortgage (principal and interest) - $1,700
  • Property taxes - $400
  • Homeowners insurance - $50

Total monthly payment - $2,150

This amount was on a 15-year, fixed-rate mortgage of about 5.7 percent. Meanwhile, after we downsized to a two bedroom, one bathroom condo, we were able to ditch a mortgage altogether. This left our monthly payments looking like this:

  • Mortgage - $0
  • Property taxes - $230
  • Insurance - $10
  • Association fee - $300

Total monthly payment - $540

This means that we're paying about $1,600 less a month in our current smaller home than in our first home.

Repairs and Maintenance

It's somewhat difficult to make repair and maintenance comparisons between our two homes since one was a house and our new location is a condo. We pay a $300 a month assessment fee with our condo that covers things like trash removal, water/sewer costs, common insurance, snow removal, landscaping, exterior repairs, and funds a reserve account for larger repair work.

When I add up the costs for such items in our home, the total comes close to that $300 total, but it doesn't account for the $199,000 reserve account that our condo association will have accumulated by the end of 2013, which is a huge aspect of our handling of repair and maintenance costs when living in a smaller condo.

Utility Differential

Of course things like cable, internet, and even water consumption and sewer costs might not be much different from a larger home to a smaller one. When it comes to things like natural gas and electricity though, we've noted a sizeable difference.

While it might not seem like much initially, the differences in these utilities can start to add up over time. While we've only been in our condo for five billable months worth of utility costs, here are the rates so far compared to the same months in our previous home:

  • Average Monthly Natural Gas Cost in Larger Home (May to Sept) -- $28.39
  • Average Monthly Natural Gas Cost in Smaller Condo (May to Sept) -- $18.38

Difference in natural gas costs - about $10 a month or $120 a year.

  • Average Electricity Cost in Larger Home (May to Sept) -- $48.80
  • Average Electricity Cost in Smaller Condo (May to Sept) -- $31.78

Difference in electricity costs - about $17 a month or about $200 a year.

So you can see how the savings can start to add up in this area over time. This only adds to the significant difference in costs between our large home and our smaller condo.

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