Richard Martin, associate professor in the real estate program in the Terry College of Business, recently spoke with Axios about the connection between rising mortgage rates and shrinking houses.
New houses are being built with smaller living rooms and fewer bedrooms to compensate for rising costs.
According to Martin, homeowners locked into lower mortgage rates are holding onto their houses, meaning pre-built starter homes aren’t going on the market as often.
“People are investing in their existing home instead of moving up, which could cause the median size of what’s purchased to go down,” Martin said. “People are not moving up to the next better and bigger house like they used to.”
The size of the average household is also affecting what contractors are building.
“If the average household is smaller, you’re naturally going to see less square footage demanded,” he said.
