Since the recent recession and ensuing credit crunch walloped American home buyers, demand for green homes has leveled off, according to a demographic expert who spoke at the 2010 ULI Fall Meeting in Washington, D.C.

Before the economic downturn, in 2006, interest in green housing was on the upswing with potential home buyers as were sustainable concepts such as walkable neighborhoods, urban living, and high-density communities. Consumers were willing to pay extra for some green features if they made their homes healthier—such as low-VOC paints--or provided a return on investment, such as energy-saving appliances or insulation.

Now, green has taken a back seat to consumer drivers like saving money, modest finishes, and smaller lots, according to Melina Duggal, senior principal with Washington, D.C.-based real estate research and consulting firm RCLCO. But the current mindset is only temporary, she said.

“All the information we have right now suggests that green is going to be a long-term trend once the economy recovers.”

Duggal said her company also has noticed a trend toward greater density in detached homes, with average lot sizes shrinking from 0.5 acre in 1999 to as small as 0.25 acre now. “And we see nothing that says builders are going to start offering larger lots again,” she said.

Attached dwellings such as townhomes have lost consumer appeal in favor of smaller detached homes on tiny lots, Duggal added. While average home size has declined from a high of 2,400 square feet, Duggal predicted that it will stabilize at or slightly above 1,900 square feet, where it is today.

The recession has changed Americans’ home-buying preferences in many ways, Duggal said. It has put an end to ultra-large McMasion-style dwellings and brought on a resurgence of interest in smaller homes with modest finishes. “Value is key right now,” she said.

Some of the trends brought on by the economy are temporary, some are here to stay, and many have implications for green builders and remodelers. Here is Duggal’s list of recession-induced housing trends:

Here to Stay
Traditional neighborhood development (TND)
Walkable communities
Urban living
Smaller houses
Smaller lots
Lack of affordable housing
Multigenerational housing
Technology-savvy consumers

Here for the Short Term
Lower levels of finishes

Gone for Now, But Will Be Back
Green homes
Attached housing
Higher levels of finishes in small homes
Active adult communities
Luxury housing for the rich
Drive to homeownership

Gone for Good
No-document loans
Exurban townhomes

Jennifer Goodman is Senior Editor Online for EcoHome.