Will smaller houses become more sellable/rentable due to US economy problems?

I know that 2bdr/1ba. houses are not exactly sought after right now, and won’t work for big families, but does anyone think there could be more of a market for these cheap houses with the problems we are going through?

My own opinion is the current market is saturated with larger, more expensive homes because of the SubPrime fiasco. There is a glut of homes for middle and upper-class housing. However, what people were not building were apartments and units for lower-class. My hunch is that older properties - SFR as well as duplexes/tris/quads/small apartments will be the most profitable things in the next 4-6 years.

The 2 bedroom could be attractive, but depends on your local market conditions, IMHO.

Thanks for the info salverson

We are currently working on purchasing our first three bedroom SFH for a rental. All our other units are 1/1 or 2/1. You can & will cut out big families from renting 2/1’s by following Federal Fair Housing Guidelines and allowing 2 people per bedroom plus one extra person per house. So what make-up of renters do we have? In our apt. building (all 1/1’s) we have:
one married couple on disability, one girl in her mid-20’s with a full time job, two middle aged women (divorcees) working full time (one of which has an 18 yr old daughter living there), and two other middle aged women on disability.
In our 2/1 SFHs we have:
a middle aged married couple, a woman on Section 8 w/ her 15 yr old boy, a single woman on disability (partial Section 8), and a young couple with a baby.
The point is that everyone needs a place to live. We’re picking up these houses at reasonable prices and they’re working out fine so far. The investors in this area are targeting houses for <30K.

thanks Justin. I think I’m going to look at 2/1 SFHs.

I forgot to mention the last place we picked up a couple weeks ago is a 3/2. Don’t know why it slipped my mind while I was writing about the other places. Everything else still applies though. If you provide a good enough value to people, you’ll be able to rent out the smaller units too.