Upgrading to a larger home is out, renovating is in

Data: Maxwell; Note: Analysis comes from 300+ U.S. lenders; Chart: Axios Visuals

House hunters aren't the only ones frustrated by this market. Homeowners stuck in close quarters are also feeling the squeeze.

Why it matters: With prices and mortgage rates still high, your starter home could become your forever home .

---

What they're saying: Nikki Rheude's family of four, plus their two cats, one dog and four chickens, are hunkering down in the 1,500-square-foot Coon Rapids home she bought in 2017.

• "I used to have the mentality of keeping the house neutral, 'because it's easier to sell.' Now I have the mentality of designing a home that will make me happy, because I am going to be here for a while," Rheude tells Axios.

She converted the dining room into a third bedroom and finished the basement to make more space for her 11- and 12-year-old children's belongings.

State of play: First-time buyers are making up a growing share of home purchases, while current homeowners stay put.

• Half of potential sellers are waiting for mortgage rates to come down before they list, according to a recent Realtor.com survey.
• Roughly one-third have already been thinking of moving for multiple years.

The big picture: More clients are opting to renovate the space they have, instead of upgrading to a larger home, says Shamika Lynch, who designs tiny interiors nationwide.

• Some are packing multiple functions in each space.

Do-it-yourself sleeping quarters. Photo: Courtesy of Victoria Fritz

Zoom in: No separate sleeping area is no problem for Victoria Fritz, who owns a 367-square-foot St. Paul studio.

• She slumbers under a platform that doubles as a Thanksgiving buffet-sized dining table.
• "My original plan was to slide my bed under it, and slide it out to sleep. But it was 2021 and IKEA didn't have the bed in stock that I wanted," Fritz tells Axios.
• Family members helped build the platform, which allows her enough space to sit up, but not stand.

Between the lines: Smaller homes are in demand as households shrink , people have kids later in life and housing costs soar, Axios' April Rubin reports.

Sign up for Axios Twin Cities for free.