A Homebuilder's Dilemma: How Much Storage Does The Buyer Want?

John Burns Research and Consulting is one of the top US firms dedicated to providing insights into the single-family home market. I have viewed their data for years but have not found anything directly of interest to me, an investor in self storage, until now. They just released data showing that for entry-level homes, storage within the home was the number one area that production home builders cut out of their entry-level homes in 2023 compared to 2022. It makes sense. Few first-time home buyers view storage as a critical feature of a home, but as a family grows, storage becomes increasingly crucial.

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Compare that to a move-down buyer, one that is downsizing and most likely an older homeowner whose kids have left the home, and no longer need as much space. Space for storage within move-down home designs increased in 2023 from 2022. It's logical to think this will have a negative impact on self storage with downsizers having more storage within their home. Stepping back a bit will put the situation in a better perspective.

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I don't believe that downsizers with more storage at home will negatively impact self storage. First, the downsizer is most likely a Baby Boomer and this generation isn't the primary user of self storage. Over 50% of today's self storage users are Millennials and Gen Z. Even Gen X uses self storage more than Baby Boomers.

Second, it is very likely that the downsizer is moving from three to two bedrooms. But they still have three bedrooms worth of stuff. Or, they are going from a three to a two car garage. Boomers have a lot of stuff. If my parents or my in-laws are an example of typical Boomers, they are saving that stuff for their children or grandchildren, regardless of whether they want it or not. The typical Boomer won’t suddenly give away their memorabilia and antiques after holding on to them for the last 30 years. Maybe they do gain an extra 26 square feet of storage closest in their new home, but that doesn't make up for the 1,000 square feet they lost when they downsized.