For years realtors have regarded price per square foot as a sometimes helpful but mostly sub-optimal valuation method because homes vary so much by property, location, amenities, quality of construction etc, but what’s making it even less relevant now is that many buyers are seeking smaller homes – to the point of paying a premium to have one. I have been hearing from my own buyers “we don’t need a ton of space” more and more over the past few years and it turns out they aren’t alone.
Less for More
One of my primary markets is New Canaan, CT – a luxury market where the average price historically hovers around $2,000,000 and the average size is between 4000-5000 square feet. As of early December 2024, the current median price of a single family home in New Canaan was roughly $2.3MM so I took a look at homes that were listed between $2-3.5MM that sold YTD in December and divided them into two groups: homes with over 5000 square feet and homes with under 5000 square feet.
By December of 2024, 37 homes that were over 5000 sq ft in this price range sold at an average of 98% of the asking price and an average of $494 a sq ft. In stark contrast, the houses that sold in that same price range but were under 5000 square feet averaged 106% of their asking price and an average price per square foot of $653, a 32% premium over their larger counterparts.
What’s Going On
These are observations from my limited frame of reference living in Fairfield County, and certainly not a barometer for the broader nationwide real estate market, but here is what we are noticing in our neck of the woods.
Higher Home Prices and Financing Costs
Since 2022, the median single family home price in New Canaan has gone from $1,916,752 to $2,290,000, about a 19.5% increase (and we have seen similar increases in surrounding towns). As home prices have risen, compounded by increased financing costs, many buyers are financially stretching even more to buy homes, making smaller, “move-in ready” homes, on manageably-sized lots more appealing than larger homes and properties that might need work or will cost more to maintain, landscape, heat and cool. Alternatively, if a home needs work or updating, buyers in this price range are more likely to buy a smaller fixer-upper than they are a larger home in an effort to curb costs and minimize time to completion. As a result, regardless of condition, most buyers want less house to manage.
Between a growing trend of downsizing locally to have a footprint near kids and grandkids, compounded by recent migration from states that have been battered by storms and other disasters, Fairfield County, CT is an increasingly desirable place to find a home big enough (but not so big that its a lot to maintain) – in other words – the same type of home Millennials are looking for.
Merging of Buyer Pools
According to the National Association of Realtors 2024 Home Buyers and Sellers Generational Trends Report, Millennials are the largest buying demographic in the US at 38% of the buyers out there. In Fairfield County, many millennial buyers, often coming from small apartments, don’t want or need a large home. “We really wanted to find a house that felt homey, charming and quaint,” says recent client Laura Pope, who bought a 3700 sq ft home in Westport. “A lot of the houses that we saw during our search, which lasted nearly 2 years, felt enormous and sprawling and just didn’t have that cozy feel that we were looking for.”
Meanwhile, according to that same survey, baby boomers (often downsizers) make up the largest demographic of sellers, at 45% of home sellers. We are in the Northeast, so many of our local downsizers historically relocate to warmer climates. However, between a growing trend of downsizing locally to have a footprint near kids and grandkids, compounded by recent migration from states that have been battered by storms and other disasters, Fairfield County, CT is an increasingly desirable place to find a home big enough to accommodate visiting kids or grandkids, but not so big that its a lot to maintain – in other words – the same type of house Millennials are looking for.
End Result
Downsizers, who often have sold a significantly larger and therefore more expensive property than what they are buying, have increased buying power and can bid a property up without much concern, while many Millennials, frustrated by multiple failed offers on homes, are also willing to pay a premium to find a home.
Even condos, historically sought by empty nesters or young professionals without children, are now attracting both young families AND downsizers, mostly because finding a single family home is so difficult. The condominiums at Pride’s Crossing in New Canaan, for example, has always been a go-to destination for downsizing couples, but now has a mix of young families and older couples living within. Ultimately, this convergence of buyers looking for a smaller place to call home isn’t just pushing prices up, it is, at least for now, reshaping the real estate landscape.
Amanda Bryan is a native New Canaan resident and full-time realtor serving New Canaan, Darien and Rowayton. After receiving her MBA and working in financial services, Amanda pivoted to residential real estate 18 years ago. She is co-founder or Team Saxe + Bryan of Compass with business partner Christine Saxe. Amanda is the mother of three, owner of too many pets and has a mild tennis addiction.Instagram @amanda.bryan.compasct
