Ever since Bidenomics led to crippling inflation, consumers have been forced to cope with paying more for less.
It’s called “shrinkflation” and occurs when manufacturers reduce the size of their products while selling them for the same price — or even more. It’s like adding insult to injury. The complete opposite of the beloved BOGO (buy one, get one), it’s like buying one and paying the price of two for one. Pay more, get less.
The housing market is proving to be no exception, as homes are getting smaller while prices increase.
“The median price of homes for sale this June remained stable compared with last year, at $445,000,” said Ralph McLaughlin, senior economist for Realtor.com. “However, the median price per square foot grew by 3.4%, indicating that the inventory of smaller and more affordable homes has grown in share.”
Some say it’s just a matter of catering to the reality of the market.
“Builders are trying to build homes that people can afford to buy since people have less buying power than they used to,” Jenni Nichols, vice president of design for John Burns Research and Consulting.
According to a recent study from Realtor.com, the most significant size reductions occurred in the South, and two of the top 10 locations were in Texas: Houston-The Woodlands-Sugar Land and San Antonio-New Braunfels.
Newsweek reports on how shrinkflation is impacting the U.S. housing market. Here’s the start of the story:
Shrinkflation is hitting American homebuyers hard, especially in the South, as a recent study found people are now paying more for smaller properties.
An analysis conducted by USA Today/Homefront using data from Realtor.com found that the median American home is now 128 square feet smaller than five years ago, and yet it costs $125,000 more.
Shrinkflation, by definition, is what happens when companies reduce a product’s amount or volume per unit without changing its retail price. The concept evokes images of candy bars sneakily getting smaller over the years, or bags of chips and cereal boxes getting emptier, a phenomenon known to outrage consumers.
But the idea can be applied to other sectors as well, including housing. Since 2019, according to the USA TODAY Homefront study, the median U.S. home has become 6 percent smaller, while the price per square foot has surged by a staggering 52 percent.
Only 18 out of the 150 major metropolitan areas analyzed by the researchers had seen an increase in home size over the past five years. Colorado Springs, Colorado, was the metro where homes have shrunk the most: the median home in the city is now 22 percent smaller than it was in 2019, but 50 percent more expensive per square foot.