Americans are moving on up to smaller, smarter homes

When architect Sarah Susanka remodeled her kitchen, she didn't use pricey granite or edgy concrete for her countertops. She used laminate. Her cabinets: Ikea.

"You can save thousands of dollars" by using simple materials in a well-designed space, says Susanka, author of the best-selling 1998 book The Not So Big House.

For more than a decade, she has urged people to build better, not bigger. Now, as the U.S. economy struggles to climb out of a tailspin and environmental concerns rise, her message has gone mainstream.

New homes, after doubling in size since 1960, are shrinking. Last year, for the first time in at least 10 years, the average square footage of single-family homes under construction fell dramatically, from 2,629 in the second quarter to 2,343 in the fourth quarter, Census data show.

The new motto: living well with less.

"There's a shift in the culture," says Susanka, whose new book, Not So Big Remodeling, helps homeowners use existing space better. She says the economy has forced people to rethink McMansions and focus instead on what they need.

Other architects agree.

"It's a return to common sense and what really matters," says architect Marianne Cusato, who designed the Katrina Cottage, a modular kit house for people who were displaced by the 2005 hurricane.

Cusato says the banking collapse last fall prompted her to co-design what she calls "The New Economy Home." In 1,500 square feet, it has three bathrooms, a half-bath and four bedrooms, one of which can be used as a rental unit. "It's a small house that lives large," Cusato says. She plans to begin selling the floor plan on her website as early as April.

"It's sad that it took a complete economic meltdown" for people to appreciate smaller homes, but at least something good can come from it, says Michelle Kaufmann, author of Prefab Green, published last month.

Kaufmann, a California architect who designs compact, factory-built, eco-friendly homes, says she's busier than ever because "these concepts are resonating on a mass level." One of her modern homes is on display in the backyard of Chicago's Museum of Science and Industry.

She says new gadgets, such as the iPhone, have helped consumers see that bigger is not always better. Now, she says, "we want more out of less."

The shrinking dream

Kaufmann and others expect the shift in attitudes to persist even after the economy recovers.

"This will remain a trend. I don't expect this (home size) to come back up," says Gopal Ahluwalia, vice president of research for the National Association of Home Builders. Nine of 10 builders surveyed by NAHB this year say they're building or planning smaller, lower-priced homes than in the past.

"We don't need big homes," he says. "Family size has been declining for the past 35 years."

Home sizes tend to stagnate during recessions, says Kermit Baker, chief economist of the American Institute of Architects. He expects that when the economy recovers, many first-time or middle-income buyers may want more square footage than they can now afford.

Baker says plummeting home values, however, have caused many people to stop seeing houses as an investment but rather as a place to live. He says home-size declines probably will continue among high-end buyers, who began scaling back even before the recession.

Steve Alloy, president of Virginia-based Stanley Martin Homes, says he started seeing that shift a few years ago and as a result began offering smaller floor plans. In the past eight months, he has introduced two models that are each under 2,000 square feet.

In the Tucson area, Jeffrey Mezger says two-thirds of his houses that have sold in the past 90 days were less than 1,600 square feet.

"In these economic times, people are more practical," says Mezger, chief executive officer of KB Homes, one of the nation's largest home builders. He says consumers, who were hit by record gas prices last summer, are also more concerned about utility bills, so energy efficiency has become more important.

Two years ago, he says, the average KB house was about 2,400 square feet, which can easily accommodate four bedrooms and three bathrooms. He expects it could drop to 1,500 or 1,600 this year. In many communities, his models now start at 1,000 square feet. In Houston, KB Homes has an 880-square-foot house for $63,995.

"We could have gotten a bigger home" but chose instead better flooring, lighting, countertops and cabinetry, says Jennifer Kovatch, 24, an accounting manager. Next month in Corona, Calif., she and her fiancé are buying their first home. It has three bedrooms, not four. "We traded an extra bedroom for upgrades."

Carole Conley and her husband had $1 million to spend when they went house-hunting in the Washington, D.C., suburbs. They could have bought a 5,000-square-foot home but decided against it. "We're a couple looking to our elderly years," she says, adding they want a house that will be easy to maintain when they retire. So they're buying a well-designed 2,000-square-foot rambler and plan to add 700 square feet.

As an interior designer, Christine Brun sees a "complete reversal" from a decade ago. Now, she says, her clients are clamoring for less square footage, and manufacturers are responding with smaller furniture and appliances.

"You're almost unpatriotic to live so large," says Brun, author of Small Space Living, published last month. She says Baby Boomers want to downsize, and young eco-minded adults "don't care if they live in 500 square feet. They just want cool stuff."

Between those attitudes and a crashing economy, she sees big prospects for smaller houses: "It's like a perfect storm."

"The key to small homes is connectedness," Cusato says, adding that people don't need as much interior space for entertainment or exercise if they live near parks, shops or other people. "I grew up in Alaska, and we played outside all the time. We could walk everywhere in our neighborhood."

How to live well with less

For years as an adult, Cusato lived in New York apartments with less than 300 square feet. She says she lived outside, in her community, as much as inside, where she simplified her belongings. She told her family not to give her any more "tchotchkes."

"Build what you need. Build what inspires you," Susanka says. "Don't build to impress your neighbors."

As a best-selling author, Susanka could have built a grand home. She chose instead a 2,200-square-foot Cape Cod with a big front porch and "three perfectly proportioned" dormers on a lot that looks like country but is close to the airport, a good grocery store and a beautiful lake with walking paths.

"What more could we ask?" she writes in her new book. She later added 200 square feet for her office. She and her husband both work from home, so office space accounts for one-third of their square footage.

"I don't feel we need more space," she says. If designed right, she says, less space can work well. "There are lots of things that can be done without spending a lot of money," Susanka says.

She tells readers to think about how they really live and, if they feel they're short on space, to repurpose rooms that are rarely used, such as formal living and dining rooms.

She says rooms can and should do "double duty." If they still feel more space is needed, she says, often a small addition will suffice.

Susanka says the push to living smaller "at some point had to happen," because McMansions use more resources and are not environmentally sustainable.

"We're in the midst of a pendulum swing," she says. "What will come of this will be a more balanced home."

READERS: What's the square footage of your home? In how small of a space could you manage?