More buyers are being lured to the simplicity and affordability that small homes bring. Plus, these smaller homes are often situated within walking distance to restaurants, stores, and shops.

After Sarah Susanka published The Not So Big House (The Taunton Press) 11 years ago, a groundswell of interest emerged about small home living. Tiny prefab homes began popping up on urban lots and prairie pastures alike. There was also renewed interest in downsizing the size of one's home for the sake of simplicity.

Now, with an economic slowdown and a desire to live very close to jobs and other services, the trend is just as hot now as it was then.

I call it the cappuccino factor. They want the cappuccino to be within walking distance, says BJ Droubi, a Coldwell Banker broker in San Francisco. Homes in Noe Valley-an area she specializes in-are between 900 and 1,100 square feet.

For buyers trying to play it safe in the softening housing market, a smaller home may be the way to go. Smaller homes tend to not only be more affordable but more energy efficient.

'Not so big' has almost become chic. Conspicuous consumption is no longer cool, says Susanka, who defines a small home as a third less space than the buyer needs. It doesn't mean 'less than.'

Maximizing Square Footage in a Smaller Home

As an architect, Susanka became frustrated when discussions with clients always began with square footage. I really tried to change the discussions away from size into the things that really matter, she says.

Genevieve Ferraro shares a 1,800-square-foot house in Evanston, Ill., with her husband, two children, and a dog. Long story short, my husband refused to move to a larger house and I couldn't find a professional decorator who could help me design the house, she says.

Ferraro launched a business, The Jewel Box Home, two years ago where she helps owners of small homes address storage, child-rearing, landscaping, and color choices. She works with various budgets and sometimes all it takes is just a simple rearranging of furniture to make a small space appear bigger and more cozy.

A smaller space needs a certain type of flow, Ferraro says. There's this conventional wisdom that bigger is always better and we have all sort of bought into that. There's a stigma that small homes are second-rate.

With a small home, you don't have to sacrifice design or functionality. For example, Ferraro offers some of the following tips for making a small home feel not so small:

  • Decide on the room's primary function and let that guide your decorating.
  • Keep color, furniture, lighting, and accessories in proportion. In other words, no large-scale pieces should be in a small room. Keep all the furnishings small and it will enlarge the space.
  • Rearrange furniture so that the legs show on all of your upholstered pieces. This creates a feeling of space and light and allows the eye to travel across the room and see through furnishings.
  • Keep tabletop accessories to a minimum. Have no more than three coffee tables and side tables. If you have a large collection of accessories, display them in rotating groups.

The Convenience Factor

In the historic districts and city centers of Maricopa County, Ariz., which includes Phoenix, smaller homes have only recently became affordable. A big part of their attraction is being within a short walk to restaurants, bars, shops, and other services.

People can pick up foreclosures or flips and can spend their money on furnishings and fixtures ... making it a luxury property on a better budget, says Heather Wagenhals of HQ Real Estate and Investment in Phoenix. You can create your own paradise within four walls, and it doesn't have to be 10,000 square feet. We're seeing some really gentrified areas turning into charming places to live.

Tony Frantis specializes in selling homes in the Sugar House neighborhood of Salt Lake City, near the University of Utah, the state's largest employer. Homes here-built between 1890 and 1950 and a mix of classic bungalows and Federal/Victorian style-range somewhere between 800 and 1,100 square feet and sell for $190,000 to $300,000.

When people are looking for small homes, they're gravitating toward areas that are neighborhood-rich, says Frantis. Most of these people could walk to anything they need.

Some new-development communities also think smaller is better. Diane Balciar sells homes in Westhaven, a development in Franklin, Tenn.

It's like a Rockwell scene, she says, referring to beautiful streetscapes (along with a dedicated person who visits homes to help with gardening), monthly concerts, a town center with shopping and dining, and a 15,000-square-foot clubhouse with a fitness center. An elementary school is on the horizon. Home sizes start at 2,000 square feet (the average is 3,200 square feet), beginning at $280,000 for a two-bedroom property. But the most popular home purchase are the smaller houses, she says.

An Economic Decision

How home buyers arrive at the decision to live in a small home varies, of course. Kerri Campbell and her husband never thought they'd end up living year-round in a 480-square-foot house they built four years ago as a vacation getaway. In 2007 they sold their sizeable house in Kansas City and relocated to this rustic abode deep in the Ozark Mountains, an hour from Branson, Mo.

We were ready for a change. Our intention was to either build onto the house or build another house, she says. They hadn't counted on building costs to double and being forced to accept a lower asking price on their Kansas City house. So they decided to make the small house theirs.

With the tighter corridors, they have less space to spread out.

It's renewed our relationship and made us like each other again, says Campbell, who is writing a memoir about small-house living.

Indeed, many people are looking for a simpler life and a small home equates to that, says Gregory Paul Johnson, co-founder of Small House Society, which gets 25,000 visitors a month to its Web site.

He points to the New Urbanism movement (which promotes walkable neighborhoods) and that more people are using cafes as their living room. Plus, appliances-especially televisions-are smaller than they once were and no longer compromise space.

People are getting stressed out and overwhelmed, and the economy's just part of that, Johnson says. The bigger the house, the bigger the headache.