According to NAR, McMansions are falling out of favor with home sizes trending smaller (3 BR more popular now?).
http://nar.ed10.net/h/KEYAP/GKWHG/B7/JISYEP
Builders/Developers out there — is this something you are seeing “on the ground” or is it just a “blip” in the stats?
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I wouldn't say it's a blip. I'd say it's a continuing trend.
Around here, over $300k has been soft for more than two years. Developers were selling a lot of $400k homes, but the sellers kept backing out because they couldn't sell their existing $300k home and make the jump up. Theres a glut of McMansions already built and on the market. Wise buyers can pick up significant deals in that price range and they don't have to go to a new development to get the elevations or floor plans of their choice...there's so much inventory out there they can find what they want and steal it at 50k or more less than the builders.
So the builder have reacted and started building what has a better chance at selling...$300k and down. Well, the reality is that $300 k won't get you a four bedroom house in most areas. It's my belief that the dollar amount is limiting the size, not the desire. Economics is forcing the issue, not consumer preference. They still prefer a huge status symbol, but can't afford it.
blue
>>"It's my belief that the dollar amount is limiting the size, not the desire. Economics is forcing the issue, not consumer preference. They still prefer a huge status symbol, but can't afford it.
That perspective makes a lot of sense. Looking at it that way, maximizing profit from a lot would not necessarily mean maximizing price for completed homes. Maybe that's a good trend.
"Let's get crack-a-lackin" --- Adam Carolla
Phil,
I think in my area there is a market for smaller cottage homes that is neglected.
We are planning a development, and inluding a section of cottage homes. If all goes well, we may change one of the later phases of regular lots and homes to add more cottge homes. Initial inquires have generated lots of interest. I have found that there is much more of a market than one would imagine.
I attached an elevation pic of a plan found on the cover of Jim Tolpins book The New Cottage Home, and I am also a fan of the design thought and ideas of Sarah Susanka. I think there is a barely noticable trend toward smaller homes, with particular appeal to old hippie types (myself included). While it plays a part, I do not think that the financial elements are the driving force. In fact, some of Sarah's thinking would provide homes that are smaller in size, but not necessarily in price.
A pic of one of Sarah's homes is also attached.
NOTE: The cottage portion of our development has become my favorite section. I love the topic and would like to learn more and see more developements and / or homes.
Here is a link to designers / architects who seem to be doing well with cottge homes and plans:
http://www.rosschapin.com
http://www.cottagecompany.coml
TX-
In case you weren't aware, the cottages in the second pic were designed by Ross Chapin and built by the Cottage Company.
As you said, while they're smaller in size, they aren't smaller in price- the units that The Cottage Company is currently building run around $500/SF- that's over $500k for a 1,000 SF 2 br cottage.
I think there's a definite need for small, efficient, inexpensive housing, without going the "affordable housing", "Habitat for Humanity" route. I say that because here in NJ, I can't fathom how kids straight out of college can possibly afford to buy a home. Even in my subdivision, where homes were $140-160k 5 years ago (for a 3 br, 1 ba Cape), prices are over $350k, and if you want to spend less that $300, you've got to invest in a Kevlar vest.
What's a single, 22 y/o teacher making $35k/year supposed to do? Even if married to another teacher, they're making $70k/year. If they buy a $300k house with even 5% down, they're carrying an $1800/month mortgage, plus $400/month in property taxes, plus insurance- that's over 35% of their gross income!
Maybe if there were still 1 br or 2 br homes being built in cluster arrangements like The Cottage Company is doing (but without all the clear-finished birch walls and ceilings), they could be built and sold at a lower cost.
Bob
Bob,
In case you weren't aware, the cottages in the second pic were designed by Ross Chapin and built by the Cottage Company.
As you said, while they're smaller in size, they aren't smaller in price- the units that The Cottage Company is currently building run around $500/SF- that's over $500k for a 1,000 SF 2 br cottage.
Yes, I am aware of the market in other areas, and the prices these cottage homes sometimes demand. My exemplary attachments are just that, exemplary of what we will include in our cottage section. With some adjustments and volume, we expect to keep cost down and sales prices should be under $100,000.00. ...fitting the budgets of young marrieds, singles and singles with children.
Thanks for your input.
"What's a single, 22 y/o teacher making $35k/year supposed to do? "
Rent. I didn't know anybody right out of college who could afford a home. And some of us actually, gasp, had to have roommates to make rent.
>>"I think there is a barely noticable trend toward smaller homes, with particular appeal to old hippie types (myself included). While it plays a part, I do not think that the financial elements are the driving force. In fact, some of Sarah's thinking would provide homes that are smaller in size, but not necessarily in price.
Putting your observations together with Blues' leads me to think that maybe there is ebb and flow in home size desired, not just a constant march to the biggest one can afford. As a separate factor is the finances of it and both these factors have a part to play. A home is a status symbol, and size matters. ;-) But there are other ways than just gross footage to show off too, and that's a desire we should maybe think about catering to even in smaller homes. Hmm, lots of great thoughts from this thread.
In terms of ebb and flow versus finances now though, I wonder if it isn't on the one hand a trend toward smaller houses due to the "hippie factor" (like the swing from "greed is good" back in the mid-eighties to more concerns about quality of life and "work/life balance 20 yrs. later) coupled with financial limitations. The timing of the change (at least as reported by NAR) leads me more toward it is likely the finances driving it 'cause it was so quick.
So at least right now, I'd have to conclude that there is a trend toward smaller houses on smaller lots and more of a "neighborhoody" overall result rather than the isolated McMansions on the big lots (but its got to be a more long term thing 'cause I'm not sure a trend like that demonstrates its effects so quickly). The financing end of it is helping to drive that exact same trend. Another "perfect storm" in real estate soon to create huge demand in the more reasonably affordable and livable scale housing?
"Let's get crack-a-lackin" --- Adam Carolla
Perhaps it dawns on some of the geniuses that their trophy homes are not really trophies if all their friends have the exact same thing, and they are killing themselves to buy and maintain them, slowly strangling them to death.
One of our planning fears out here on the North Shore of LI is what will become of these ugly, "customized" tasteless monstrosities, same as with the contemporaries that sprung up like ugly weeds. Who will be the second home buyer? Will they fall into disrepair and deteriorate, the neighborhoods fallen into ruin?
Some have the attitude of screw 'em. But the harm spreads like a disease throughout a neighborhood. And yet people come before the Planning Board, all full of their self-importance, demanding their god given right to build yet another cookie cutter McMansion, twice the size of anything they will ever use, to prove how rich and powerful they are. And while the trend now toward traditional styling is certainly better than the tractor shed contemporaries, they still manage to make them butt ugly with their "personal touches."
SHGFor every complex problem, there is a solution that is clear, simple, and wrong.
-H.L. Mencken
As you observe, many factors contruibute, and it would be a discredit to assume that any one factor is dominating. This trend is not something that is new or risen quickly. There are those who have been preaching this for a long time. It has slowly become more apparent.
20 years ago we may have liked Led Zeplin, but we did not find there music associated with Cadillac commercials as we do now.
Some reading of Sarah Susanka and Jim Toplin would be appreciated by those interested in the subject. http://www.notsobighouse.com and http://www.cottagehome.net. their books are avaliable through The Tauton Press.
Quality of Life / Community / Hippie Factors / Financial: all of these things are inter-related and play a part in the whole.
The senior citizen demograhic controls about 75% of the wealth in the USA. This group is increasing in size every year with increases in longevity & retiring of boomers. This group not only has the money, but many of them don't need or want a huge house...so they spend more on less...the driving force behind the expensive custom cottage.The growth of the lawn service business means you don't have to live in a retirment condo on a golf course to have a lawn manicured by others.I have been working for the last several weeks, customizing a small cottage for a couple in this senior group. Got to build a custom doghouse/dogrun, add skylites, etc. Next up are a deck, pergola, fence, bridge over the koi pond, gazebo...All the extras for a 1200 s.f. cottage. I bet they will have $400/s.f. in it if they want to.
Yes, I understand. I met with some investors last week who want to build some upscale Patio Homes to serve the seniors market.
On the cottage home subject, these smaller homes can also serve singles, young couples, ect.
Cost can be kept down to broaden the market.
I wonder how much of this is a result of $1000 dollar utility bills and sudden surges in property taxes?
When factoring the difference in overhead (HVAC, taxes, cleaning and maintenance) for a 2500ft/sq home vs a 4000ft/sq, it can mean a several hundred dollar difference in the monthly cost of living.
Troy Sprout
"[email protected] forgot the screws."
The comment about $1000 utility bills struck me as "funny." This past weekend, I was complaining to a friend that our local utility will be deregulated as of July. Rates will increase 72%. That means my summer electric bill (with central AC) will "sky rocket" to about $160 a month for my 1000 sq' house. The friend used to live next door to us in a similar home (with similar utility bills). They bought a McMansions just under a year ago. My $160 bill did not get a sympathetic response, as their May bill was $870 . . . before the real heat and need for AC has even fully hit! They wanted to downsize this past spring, when fees were subtracted and the "wilting" real estate market was factored in, they figured they'd lose $50-60K. Jason
maybe your friend just needs a new wardrobehttp://www.newlaunches.com/archives/usb_powered_air_conditioned_clothes.php
When I moved to a new town in 2003 I had many conversations with the real estate agent while looking for a home. I had much trouble finding what I wanted. All the homes in the under $150,000 range had their problems with leaks, mold, run down condition, location, etc. After having an old home some years prior and having just left a brand new home that I lived in for three years, and taking a job with long hours, I really wanted something new that needed little work, but was small enough for a single guy. I wanted a basic 3 (or even 2) bedroom house without all the McMansion fluff. There were a number of new developments in the area, but all the homes were McMansions. There were many to choose from because they were not selling. There were even some that were started and abandoned. A very few that were started were torn down and turned back into vacant lots. (The town was hit hard by the telecom bust.)
I asked the agent why builders don't build any smaller homes. Nice, basic, but well constructed young family or empty nester homes. She said she did not understand why either. Local agents had meetings with developers and builders and said that if they could build homes for $150,000 or less they could sell them all. But they can't sell $250,000 to $400,000 homes -- they just sit there. So many builders lost (and are still loosing) money because they refuse to build homes people can afford to buy.
In my own neighborhood there are two abandoned foundations, and about eight nearly completed but vacant McMansions. They've been there since 2002. I would hate to be the builders with, collectively, nearly $2,000,000 in cost sitting there unsold. I ended up buying a too-large 4 bedroom home for $202,000, about $50,000 less than the previous owner paid.
I wonder how much of the cost factor is driven by the "fixed" costs associated with building a house. By that I mean the land, permit, hook ups, perhaps even "infrastructure" improvement costs. If a builder/developer has to put in a road, the cost of the road probably doesn't change much whether it leads to $150K houses or $400K houses. And as these costs add up, maybe the builder can only make money if the house sells for $400K?
Great point
Your statement seems to be the most accurate. How can a builder pass on the initial cost to a home owner when the government agencies want $10k for a water meter, another $10k, for sewer hook up, $5k for a gas meter, $5-10k for permit fees.
That alone is $40k just to start with, not including if they need to spend $$$ on environmental inpact reports, laywers, roads, "what are you going to give us for letting us let you build a subdivision"
Try watching a city council meeting when a developer wants to put in a subivision in their city. All of a sudden the city needs a new park, new roads, traffic lights, school fees and Walmart comes in for free. I know, why did I ever bring that "7 letter word" up.
"How can a builder pass on the initial cost to a home owner when the government agencies want $10k for a water meter, another $10k, for sewer hook up, $5k for a gas meter, $5-10k for permit fees. That alone is $40k just to start with"And here, in order for the city services to be more 'self-sufficient' and make the city's budget look better, everyone has to charge more money so they can operate. A meeting with a permit official to answer any questions before you submit? Same with a zoning official? $70 an hour.Apply for a variance, with no guarantee of getting it approved?$1500.Such policies are a big problem for the smaller players/owners. And a very shortsighted move for any city that's trying to encourage home ownership or business development.
Yeah, but take one step further... Where we lived last, we we lived in an area that consisted of 1, 2, 2 1/2, 5 10,20 acres lots. The county came in and rezoned the whole are to all 1 acre minimum. No problem. Now, ANYBODY can subdivide their property. BUT it will cost you a minimum of $30keach lot just for the paper through the county. You do all the rest, they just rewrite the property description(s) and add a new parcel to the map
2 acres split into 1 acre each , $30k. You would THINK that they would make it more affordable so that people would be willing to split and build more. If they did they would have a huge increase in property tax revenue in the range of $3-5k per year, or more.
It is possible that the county is trying to DISCOURAGE development with those kind of prices, while ostensibly allowing the owners to have their "property rights". Perhaps the "No growth" crowd is controlling the county council.I'm not saying this is the case, but never assume that the relevant gov't WANTS development.
Usually, a large increase in new homes also results in a large increase in demands for services, wider roads, more schools. New comers gritch and moan about having to pay for a major share of the improvements, existing residents gritch and moan about overcrowding and having to subsidize the new comers. That is, unless your area is different than those I have known.
True. That's what good planning and zoning is supposed to keep in check. Moderate growth should be self-sustaining, if possible. The problem is when politicians and officials see dollar signs from explosive growth and toss the plans out the window.Your part of the country (Portland) is a national example in planning courses for how to do it correctly.
Another factor is the tax revenue generated by the McMansions. A 3000 sq ft McMansion on a 5000 sq ft lot generates lots more taxes than a 1200 sq ft bungalow on that same lot. Cities and counties always have their eye on the expected tax revenue - lol.
I can only hope, as I currently have about one thousand or so hours and am close to an agreement that will tie up a fair amount of my credit line, based on the notion that small and well built will soon be in style again.
Lot of input from the building side; here's some from the buyer side:
We could have afforded a $500K+ house. We elected to add on to our 960 sq ft 50's ranch instead. We added about 700 sq ft over a full, extra deep basement. Everything's on one level, the new addition is a big kitchen/family-room/dining room/laundry room screen porch. Again, bringing everything important to one level. No stairs, no carrying laundry up/down. Open plan. Unexpected benefit is that in order to add on we needed to basically add on a wing to the house. This moves all the living/public areas to one 'wing' and keeps the private bedrooms/baths private (and quiet).
I've been in many of the so-called McMansions. They're big, yes, but who wants to clean them, maintain them. I've also seen a lot of the McMansions built. Our town has a lot of teardown activity. I'm not impressed. It seems the builders think that shoddy materials can be buried in a massive structure and not be noticeable. Plus, it seems like they're all designed by idiots (sorry if that offends anyone) with the only stair access to the bedrooms coming down straight to the front door or balconies connected the bedrooms and baths upstairs running across the foyer, which always seems to have a big window facing the street. Why do staircases nowadays need to be so public? When did bedroom bathroom traffic become public spectacles? And don't get me started on some of the kitchens we've seen. If someone wants big for big's sake, then more power to them. But I think what you're seeing is simply common-sense rearing its head. Is that a bad thing?
Common-sense, or wisdom gained with years? Either way, I think you're definitely going to see the trend go towards smaller and low maintenance.