Smaller homes gain value faster than large ones, report finds

The U.S. may be among the top in the world when it comes to average home size, but bigger isn’t always better. A new analysis of home listing prices and sizes in the country’s largest metro areas shows that the value of smaller homes generally rises at a faster rate than larger homes, according to Nerdwallet.

In 17 out of the 20 metro areas studied, the smallest 25 percent of homes grew by 8.9 percent from 2013 to 2016. The second-largest quarter of homes had the second-largest percent increase in prices, at 7.4 percent. Some of this boost in price appreciation may be due to rising demand for homes in cities, where living spaces tend to be smaller. Urban housing shortages, particularly in the starter home inventory, also have an upwards effect on the prices of smaller homes.

However, it’s important to note that while smaller homes appreciated faster percentage-wise, larger homes appreciated more in sheer dollar amounts. The price tags of the smallest homes studied appreciated by an average of $57,535 over the last three years, while the largest homes appreciated by $99,790. Because large homes are generally more expensive to begin with, this increase makes a smaller proportion of the entire home value. Explore the full report here.

Via: Nerdwallet