People never learn.

We're in the market for a home and aim to buy the smallest space we NEED - which isn't much.

I've been reading reports on residential real estate for years and this is one of the best ones I've seen, Jaime. Residential real estate is reflecting the economy -- people who have good jobs and are secure in their futures continue to buy the goods and services they want. Notably, they do not seem to be becoming more frugal, being willing to live in smaller homes for example.

so, essentially, they are just making the same mistakes the made before? buying bigger and bigger and spending as much as they can?

I guess there is no point in studying history since people don't seem to learn from it.

We have an idea of what size/style house we want (2 bd/attached), and are considering factors such as the house's price, condition, and location, over its size.

We want to get the lowest price for the kind of house/location that we're looking for as opposed to trying to get the 'best' deal for a given target price.

I wonder if some of these home buyers are thinking about housing renters or extended family members or even adult children who never seem to move out?

Hopefully, some thinking about the future is going into making these buying decisions other than "I want the biggest house I can get." type of thing.

Buying the small "just the size I need" house is all well and good until you have another kid or an aging parent needs to move in or your 20 something can't get a job right out of school.

Perhaps the people buying these "big" houses are thinking about staying in them longer (30 yrs?!?!).

Oh, good point, Ken -- I'll have to put up a poll to see whether prospective buyers are thinking short-, medium- or long-term.

Twenty five years ago we stretched ourselves to purchase a four bedroom home with a den,,,,,,,,,,,it was tough but today with the kids gone we have the master bed room a guest room a music room (great bose speakers and a 100 cd juke box) and a doll room,,,,,,,I'm glad we stretched ourselves , isn't life grand,,,,,,,,,,,anyone who is thinking about four bedrooms , go for it , you will not be sorry...............

More likely, it was people who needed 3 and 4+ BR houses who were "priced out" during the housing bubble.

Just counting # of bedrooms without mentioning square footage gives no indication that people are buying more than they need. A 2 bedroom attached house could be a 1900's era 700 sq ft row home with no parking or a recently built 1300 sq ft town home with a 2 car garage.

Yeah, dru, I wish the MRIS online stats tracked trends in square footage as well for that reason.

Still, you can see from the price trends that the average two-bedroom costs less than the average three-bedroom, which costs less than the average four-bedroom (comparing attached homes to attached homes, and detached homes to detached homes). So on average, buyers are paying more the more bedrooms they get.

When we were looking for our house my sister and I only wanted 3 bedrooms, but the 4 bedroom we ended up buying cost the same (or less) than the smaller homes we looked at. So yes, we have much more house than we need, but it's not because we're ignoring past trends or overextended ourselves out of greed. It just made more sense financially (both now and for future resale.)

And I'm not gonna lie--the extra space has been really great.

I looked at the three bedrooms for resale value & roommates. My roommate moves in next week & I turned one room into an office. The great thing about row homes is you can change the lay out, add & subtract bedrooms and still have good size rooms. My sister lived in a 600 square ft apartment & loved it because she never purchased anything for the reason of no space, she ended up saving twice the $$. But on the second hand my parents purchased a 3 bedroom place & ended up adding a 4th bedroom and because of the constant revolving door of adult children moving in & out. They are happy with the larger house.

There are multiple ways to look buying a house. The current state of the economy may change someone's future plans for their property. Instead of "I need two rooms one for me & an office/in home gym", its "I need three rooms, one for a roommate incase I lose my job or my sister looses her job".

What are we talking about here? A standard four bedroom home is a far cry from anything like a McMansion. Often, the some of the bedrooms are so small that at least one of them is better used as an office and, presto, you have a 3 bedroom w/den. For anyone with kids, or even empty nesters with visiting kids and even grand kids...not much of a luxury, really.

if nothing else, the tremendous bargains to be found in foreclosures is allowing buyers to afford more than they thought they could afford.

I would side more on the practical side and opt for a small functional one and save more for retirement.