It’s a quiet transformation, but one that’s hard to ignore once you start looking. In affluent neighborhoods where architectural ambition used to mean sprawling square footage, gleaming foyers and multi-car garages, something unexpected is taking place. Homes are getting smaller. Not all of them, and not dramatically—but the trend is real, and it’s reshaping not just design, but the very way wealthy families imagine home ownership. The American Institute of Architects’ second-quarter 2025 survey may sound like industry data, but behind the numbers lies a more human story. It’s about choices, compromises, and how luxury itself is being redefined in the modern housing economy 🏡.
Take the Delacour family in Marin County. Four years ago, they had plans drawn up for a 5,000-square-foot modern farmhouse overlooking the bay. Then COVID hit. By the time the economy started to stabilize, construction costs had soared, interest rates weren’t as gentle, and even affluent clients like the Delacours began to reconsider. They eventually built—but on a reduced footprint, prioritizing passive solar design, smart storage, and indoor-outdoor flow instead of an extra media room or fourth guest suite. As Madeline Delacour put it, “I didn’t want to vacuum space we never use.”
Her comment may sound offhand, but it’s emblematic of a deeper shift revealed in this year’s architecture trends report. Among firms designing affordable or entry-level homes, 25% say square footage has shrunk. That might not surprise anyone watching the cost of lumber or the price of land in markets like Austin or Denver. But what’s more telling is that even high-end homes are starting to embrace efficiency—perhaps not in the same square-foot urgency, but in the way they’re planned. According to the report, 12% of all architects surveyed noted a downward trend in overall size, up significantly from last year’s 3%. In architectural terms, that’s a loud signal.
In places like Westchester or the Hollywood Hills, you’ll still find clients who want dramatic spaces and opulent features. But more often now, architects say, they’re working with homeowners who want flexible floor plans, serene minimalism, and intentional use of every inch. As designer Gabrielle Montes from Aspen explains, “They don’t want big for the sake of big anymore. They want smart.”
That smartness is translating into more thoughtful layouts. Open-concept designs aren’t new, but they’re evolving. Instead of cavernous great rooms, you’ll find fluid yet intimate zones—kitchens that flow into cozy living areas, with sliding doors that extend those moments into the garden 🌿. There’s a sense of right-sizing, not just to budget, but to lifestyle. This is particularly true for what the industry calls “move-up buyers”—those upgrading from starter homes, often mid-career professionals with growing families.
Here, the push for more space is still real, but so is the awareness of what truly adds value. A larger home office trumps a formal dining room. A walk-in pantry with hidden appliances might matter more than a third bathroom. And natural light, clean air systems, and quiet corners to retreat have all become premium features.
Of course, the market stress underpinning these shifts isn’t just aesthetic. Rising mortgage rates, labor shortages, and supply chain delays have left many homeowners in a holding pattern. For first-time buyers, the challenge is even greater. In coastal cities, entry-level homes are still priced like luxury condos were a decade ago. This leaves developers trying to squeeze maximum function out of smaller lots. It’s no coincidence that accessory dwelling units—ADUs—are on the rise, now appearing in over 60% of design briefs, up from the previous year. Once considered the domain of aging parents or rental income, ADUs are now viewed as essential versatility. Teen hangout? Home gym? Private studio? The uses multiply.
For families like the Kumars in Seattle, their backyard ADU became a lifeline during the pandemic. What started as a plan for a guesthouse turned into a dual-purpose home office and rental unit that now helps them offset their mortgage. “It’s the only reason we stayed in the city,” says Raj Kumar. “Without that income, we’d have had to move further out.”
The notion of “moving out” used to mean more house, more yard, more everything. But now, it often means compromises—longer commutes, less community, and missing out on the walkability or school districts that wealthier buyers often prioritize. This has put subtle pressure on the luxury suburban market, where custom homebuilders are increasingly balancing demand for square footage with the rising cost per buildable square foot. In high-CPC real estate markets like California, New York, and Florida, this is especially visible, as even million-dollar projects are scrutinized for efficiency.
And let’s not forget the environmental layer. Among upper-tier clients, sustainability is no longer a buzzword—it’s a baseline expectation. Solar-ready roofs, rainwater catchment systems, and high-efficiency insulation are often just the start. Smaller homes, in this context, aren’t just about money—they’re about values 🌎. Many architects say their clients want to “do better” with their homes—not just in design, but in footprint, energy use, and long-term resilience.
It’s this human side of the data that brings the report to life. While statistics can show us trends, it’s the homeowners behind them who reveal the texture of this change. Like Cynthia, a retired theater director in Connecticut, who sold her five-bedroom Victorian and now lives in a 1,200-square-foot eco-cottage designed around her art collection and garden. “I realized I don’t need so much house,” she laughs. “Just good light, and somewhere to put the kettle on.”
The real estate world, especially the luxury segment, is often slow to change. It’s anchored in status, permanence, and long-held beliefs about what “success” looks like. But as this year’s architecture trends show, those beliefs are starting to shift. The future of residential design may not be smaller in ambition, but it’s certainly becoming more intentional. And perhaps that’s where the new luxury lies—not in how much you have, but in how thoughtfully it’s put together. 🛋️