Luxury homebuyers are scooping up smaller houses, encouraged by lower mortgages, less maintenance, and fewer family members hanging around

Modest-size luxury homes in the top 20 US markets sold faster than big ones from April to August, Coldwell Banker data indicates.

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• Wealthy buyers are seeking smaller homes, according to the real-estate brokerage Coldwell Banker.
• High interest rates, a shortage of big properties, and second-home buys are contributing factors.
• Real-estate agents say their clients are tired of high maintenance costs and sheltering in place.

Americans who sought to consolidate living, working, learning, and playing under a single roof over the past few years appear to be thinking twice about the need for supersize abodes. Demand for mansions is falling, the numbers show.

A new Coldwell Banker analysis found that in the top 20 US markets, luxury single-family homes with modest footprints of 2,500 to 3,500 square feet sold 18.6% faster from April to August than homes of 4,500 to 5,000 square feet. In 2021, those larger homes sold 21.6% faster than their smaller counterparts.

On top of relaxing COVID-19 protocols and a growing willingness to reenter the social world, people in real estate point to other factors behind the trend. Coldwell says that high home prices and interest rates have increased costs for extra space, that more small homes are available than large ones, that people are returning to cities where homes are generally smaller, and that wealthier people are hunting for second or third homes or investment properties.

There are additional lifestyle factors at play, too, real-estate agents told Insider. Among them are a desire to have a more efficient and manageable home, and downsizing of family units that grew larger during the coronavirus pandemic, they said. Possibly most important, retiring baby boomers — perhaps 10,000 a day — with flush coffers are seeking new and more fluid lifestyles, said Leonard Steinberg, the president of the New York City-based brokerage Compass.

What it all means is that these luxury homebuyers are increasingly competing with regular folks just trying to put a roof over their heads.

"That's a lot of people competing with the millennials who delayed homebuying" and their decision to have families, Steinberg said.

Baby boomers "who are either retiring or semi-working from two locations" are making it difficult for the millennials who are entering the market, he added.

Just because a family can afford more space doesn't mean they want it. Steinberg said a greater awareness about energy consumption — and overconsumption, in general — especially in "a world that's in the midst of a bit of an energy crisis" was contributing to the downsizing trend in the luxury market.

To Stacey Oestreich, a Douglas Elliman broker in New York's Westchester County, downsizing is all about manageability.

"People want to get their arms around life and enjoy living as opposed to maintaining the house," she said. "It's much more manageable from a heating, cooling, and maintenance standpoint if you're looking at a 2,000-square-foot home on one level versus a multilevel, 5,000-square-foot home."

Oestreich added that some of the downsizing had been delayed by the pandemic. Before, she said, large properties weren't coming to market in part because families wanted to shelter in place together.

Oestreich said the upward pressure on Manhattan rents, which just surpassed an average of $5,249 a month, indicates young families in her region are returning to their city lives.

Oestreich has a client in the town of Pound Ridge, New York, near the Connecticut border, who's looking to downsize even though they've spent thousands of dollars updating it over the past six years with 17 HVAC zones, radiant heat floors, and a spate of other modern amenities. Though the home is smaller than the one in which they raised their family, they want to downsize again.

"People make changes at different points based on their needs," Oestreich said. "Way back when, people would buy their home and that was it. Now people are very smart about making choices that work for them."

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