Monday, June 19, 2006

Homes Getting Too Big?

From RealtyTimes:

New Homes: Will The Big Home Downsize?
by Blanche Evans

As city planners, developers, builders, and Realtors look to the future of real estate, one question is on everyone's minds -- are homes getting too big?

Surprising no one, the U.S. Census department has found that new homes today are "substantially larger and packed with more amenities than their predecessors of 30 years ago."

"Between 1975 and 2005, the portion of new homes built with central air conditioning has risen 43 percent, while the portion of homes built with fewer than two bathrooms has fallen from 41 percent to just 4 percent," noted Jerry Howard, chief executive officer of the National Association of Home Builders (NAHB). "Meanwhile, the share of newly built homes with four or more bedrooms has risen steadily from 21 percent 30 years ago to just shy of 40 percent last year."

In 2005, the average floor area in a new home reached an all-time high of 2,434 square feet -- up from an average 2,349 square feet in 2004 and just 1,645 square feet in 1975. The Northeast had the largest average new-home size for any region last year, at 2,556 square feet. New homes in the Midwest had the smallest square footage, with an average of 2,310 square feet.
...
Affordability issues may also herald a return to the smaller home. Rising interest rates, an increase in lower-paying jobs, utility costs, and building and repair costs all favor the construction of smaller homes.
...
Despite the reluctance to think small, the National Association of Home Builders predicts that the average new home in 2010 will be 2200 square feet, not the record-breaking 2,434 square feet of 2005.

30 Comments:

Anonymous Anonymous said...

Well, with Foreclosures, defaults,
and motivated/desperate sellers
coming soon perhaps we may see
easing of prices.

But this is rare in Bergen,Essex,
Morris,,,unsold homes are available
but I dont see the downward pressure to sell.

Looked at a few open houses
yesterday. Really high priced for
what you get.

Realtor looked fine to me at one,
told me to hurry would not last.

6/19/2006 07:14:00 AM  
Blogger Metroplexual said...

Some stuff I read lately says the trend last year has been downward in sq footage.

6/19/2006 07:32:00 AM  
Anonymous Anonymous said...

You better believe it and the Money grubbing sellers want to stick you with their high fixed cost McMansion and put you into monthly slave payments.

The grubbers retire comfortably in retirement while you the bagholder buy a Ripoff home and enter into Mtg slavery.


BOOOOOOOOYcott Houses

Bob

6/19/2006 07:58:00 AM  
Blogger Metroplexual said...

http://www.sun-sentinel.com/business/local/sfl-616mcmansions,0,544123.story?coll=sfla-business-headlines


Nation's love affair with McMansions shows signs of waning


By JUNE FLETCHER
The Wall Street Journal

June 16, 2006, 11:15 AM EDT


Mickey and Jane Finn put their five-bedroom, 6,200-square-foot home in Leesburg, Va., on the market in April, but already they've cut the price to $899,900 from $1.1 million. Now, they've decided to put it up for auction.

What's the hurry? Down the street in their leafy subdivision, two similar-sized houses are also on the market, and around the corner, five more have for-sale signs. The Finns, who paid $692,000 for the new house in 2002, recently retired and, with their two children grown, they're eager to move to a place half the size. ``We don't need this big a house anymore _ if we ever did,'' says Mr. Finn, age 63.

The golden age of McMansions may be coming to an end. These oversized homes _ characterized by sprawling layouts on small lots, and built in cookie-cutter style by big developers _ fueled much of the housing boom. But thanks to rising energy and mortgage costs, shrinking families and a growing number of retirement-age baby boomers set on downsizing, there are signs of an emerging glut.

Interviews with dozens of real-estate agents, sellers, developers and housing economists turn up signs across the country. In an affluent Dallas ZIP Code, where half the houses have four bedrooms or more, home sales fell 31 percent in the first quarter compared with the previous quarter. But sales rose 23 percent in a nearby ZIP Code where 7 percent of houses have that many bedrooms. In Santa Fe, N.M., homes in the 2,000-square-foot range sell within weeks, while larger ones languish for months, says broker Pat French. In the Boston metro area, sales of homes with four or more bedrooms were flat in the first quarter from a year earlier; sales of homes with three bedrooms or fewer rose 14 percent. New Jersey appraiser Jeffrey Otteau says the inventory level statewide for large, $1 million-plus houses stands at 13 months, more than twice the state's overall average of six months.

There is no formal definition of what constitutes a McMansion. (Some would say it's any home bigger and showier than your own.) One broadly accepted definition, used for this article, is a house larger than 5,000 square feet _ about double the national average _ with four or more bedrooms that is built cheek by jowl with similar houses. Most have been erected since the mid-1980s, when major developers such as Toll Brothers and K. Hovnanian Homes began to chase couples who wanted more space _ and luxury _ than they had when they were kids. These houses often boast grand, two-story entryways, three-car garages, double-height family rooms and master-bedroom ``suites'' equipped with sitting areas and whirlpool tubs. Developers market the homes under names such as the Grand Michelangelo, Hemingway and Hibiscus _ while detractors have dubbed them ``garage mahals,'' ``faux chateaux'' or ``tract castles.''

The 2003 American Housing Survey, the latest available, found nearly 3.2 million homes in this country with 4,000 square feet of space or more _ the largest category the group tracks _ up 11 percent since the previous survey in 2001.

Part of the big-house mania was fueled by speculation as home prices surged, says housing economist and consultant Thomas Lawler in Vienna, Va. ``Folks bought megasized houses well beyond their needs to increase their investment in real estate,'' he says.

Now, some boomers in their late 50s are counting on selling their huge houses to help fund retirement. Yet a number of factors are weighing down demand. With the rise in home heating and cooling costs, McMansions are increasingly expensive to maintain. Nationwide, electricity rates have risen 12 percent over the past three years, while the price of natural gas for heating has risen 43 percent in the same period, according to the U.S. Energy Information Administration. That means it can cost $5,000 a year or more to heat and cool a 5,000-square-foot house in a city such as Farmington, Conn., according to Connecticut Light & Power Co.

The overall slump in the housing market also is crimping big-home sales. The volume of newly built homes sold fell 11.2 percent in the first four months of the year from a year ago, while sales of existing houses fell 5.7 percent, says the National Association of Home Builders and the National Association of Realtors. Thursday, one of the biggest home builders, KB Home, cut its earnings outlook for the year, citing declining demand. Bruce Karatz, chairman and chief executive, said demand has fallen ``largely due to a sharp reduction of speculative purchases and an oversupply in new and resale inventory.''

Meantime, the jump in interest rates has put the cost of a big house out of more people's reach. With 30-year mortgages at 6.2 percent Thursday, a $700,000 loan costs about $4,300 a month, up from $3,900 when rates were 5.28 percent in June 2003, according to Bankrate.com. ``The young people coming up don't have the means to absorb these big houses,'' says Mr. Otteau, the New Jersey appraiser.

Since February, Kris and Ray Victory have been trying to sell their five-bedroom house in Brookville, N.Y., built in 1987 with a sunken living room and a fireplace in the master-suite wing. The couple raised three children in the 8,000-square-foot home, but they say younger families seem turned off by its $1,000-a-month utility bills and $25,000 annual taxes. ``Buyers tell us it's too big,'' says Mrs. Victory, a 45-year-old electrical engineer. The couple recently shaved $200,000 off the $2.35 million price.

This dynamic could become more acute in coming years. As the nation's 78 million baby boomers, born from 1946 through 1964, become empty-nesters and hit retirement age, many are already selling their trophy homes and trading down to smaller models. There are roughly the same number of people in the next pool of potential buyers, but they're marrying later and often have smaller families: U.S. Census statistics show that the average household size in 2005 was 2.57 people _ down from 3.14 in 1970.

Already, the McMansion oversupply is acute in places like Loudoun County, Va. In the fast-growing area northwest of Washington, D.C., thousands of hulking, red-brick colonials sprouted over the past 10 years on quarter-acre lots that had been carved from farmland and woods. In May, 4,719 houses were for sale, more than three times the year-earlier level. The number of sales dropped 39 percent to 484 in the month, and the number of days a home remained on the market lengthened to 70 from 14. ``Sellers are dying out there,'' says local real-estate broker Michele Stash.

In one Loudoun subdivision, Tom Green, a 47-year-old airline pilot, put his five-bedroom house on the market six months ago for $1 million so he and his wife could downsize to a $592,000 townhouse nearby. But his home had to compete with 38 others for sale in the neighborhood with four or more bedrooms. His 5,600-square-foot, five-bedroom house, which he bought new for $515,000 in 2000, didn't get a nibble for months. Finally, a relocating California family agreed to buy it if the Greens would leave behind their high-definition TV and a lifesize Spiderman statue that had been a gift from Mr. Green's sister _ plus slash the price to $820,000. (They also had to throw in a cookie jar with ``Biscuit'' _ coincidentally, the name of the buyers' dog _ written on the side).

The Greens complied. The buyers, John Zuccaro and Cindy Fonseca, say they were emboldened to make their demands when they saw how much the market had cooled since April 2005, when they sold their three-bedroom house in Torrance, Calif., for its full asking price of $759,000 in only five days.

Though huge houses continue to be built across the country, many architects and builders appear to be responding to shrinking demand for McMansions. In the latest quarterly survey by the American Institute of Architects, 68 percent of the 500 residential architects polled said home sizes are stable or declining, compared with 58 percent a year ago.

For anti-McMansion activists, who hate to see big homes supplant smaller ``teardowns'' in established neighborhoods, a decline in demand may be good news. Homeowners in some areas have successfully lobbied for laws designed to rein in the light-and-view-blocking monsters: Last year, Arlington County, Va., limited home footprints to no more than 30 percent of a lot, while Wood-Ridge, N.J., recently said homes could take up no more than 55 percent of a lot.

Faced with dwindling demand and a fall in their stock prices, many national builders are starting to focus more on smaller houses, which often feature separate dining and family rooms but just two bedrooms. K. Hovnanian Homes, long known for McMansions, is building such houses under its ``Four Seasons'' label in nine states. Toll Brothers is creating communities like Cranbury Brook Villas in Plainsboro, N.J., which has two-bedroom homes ranging from 1,656 to 1,958 square feet that can be equipped with lofts, sunrooms and dining-room accent columns (the ``Bayberry'' model starts at $389,975).

Yet some families have found it hard to downsize. In Phoenix, David and Mary Mumme, both 49, are selling their 4,938-square-foot house, partly because their oldest son is heading to college and partly because maintaining the house and yard _ with pool and waterfall _ takes about eight hours a week. They're asking $1.8 million, about three times what they paid for it six years ago, because they saw nearby houses sell quickly for about $2 million last year. But even though the house has 12-foot ceilings, marble countertops and skylights in the closets, no one has made an offer during the month it's been on the market.

John and Barbara Fiore, both 54, had to slice $50,000 off their $900,000 price to move their 5,500-square-foot house in Warwick, N.Y. Ms. Fiore, who has five grown children, says she worried that no one would want her six-bedroom home while it sat on the market all last year, because today's families are smaller. (The eventual buyer was a married doctor with three young children.) The delay in selling ``was scary,'' says Mrs. Fiore. The Fiores, who built the house 14 years ago, now live in a three-bedroom house nearby that's less than half the size. Meanwhile, Mrs. Fiore's parents recently sold their Warwick house in a month _ but it's only 2,500 square feet.

And even some young couples who have tried the big-house life are getting out of it, trading space for higher-quality construction. Last October, Andrew and Sheri Leppert of Alpharetta, Ga., both 32, exchanged their four-bedroom, 2 1/2-bath home for a smaller one that has only three bedrooms and two baths _ yet, at $450,000, cost 50 percent more. Ms. Leppert, a homemaker who now has a young child, says she was attracted by the new house's details _ including beaded-glass windows, wide-plank flooring and 9-foot-tall doors made of solid wood _ which elevated it in her mind above the ``Georgia sprawl'' house she was leaving. She and her husband never used the fourth bedroom of their old house, she says, and she doesn't miss cleaning the extra space. ``Taking care of it became a burden,'' she says.

6/19/2006 09:09:00 AM  
Anonymous Anonymous said...

Heres one:

Somebody post this beauty

www.city-journal.org

See the article:

"The Mob That Whacked Jersey"

Anybody that was doubtful about
many of the comments on this board
has to read this.

6/19/2006 09:13:00 AM  
Anonymous Anonymous said...

Real Estate Cartel

http://www.consumerfed.org/pdfs/Real_Estate_Cartel_Release061906.pdf

I've been researching this lobby group and their papers on investment information and saw this happy Monday morning nasty gram to the Real Estate industry this morning.

I don't know anything about Consumer Federation...is this just another of many periodic jabs at the "Establishment" or do they actually do anything.

Does anyone know if this has anything to do with the
DOJ investigations of MLS and proposed changes?

Pat

6/19/2006 09:33:00 AM  
Anonymous Anonymous said...

Link-

http://tinyurl.com/ooasb

Pat

6/19/2006 09:36:00 AM  
Anonymous Anonymous said...

I posted this comment once before, my neighbor 3000 SF + still has his windows open on a daily basis. My guess is he's having a hard time paying for his big mortgage and his utility bills.

Anyway, I would rather have a smaller house with more land. It seems most people want the biggest home they can squeeze onto a piece of property.

6/19/2006 10:52:00 AM  
Anonymous UnRealtor said...

Wasn't it just last month that an NAR lackey was saying retirees would be snatching up all these big houses?

Don't all retirees want inreased monthly expenses and maintenance?

6/19/2006 10:54:00 AM  
Anonymous Anonymous said...

Pat,

Excellent link...that's what I think is one of biggest problems here.

Andy

BTW you take little summit out for a walk today?

6/19/2006 11:29:00 AM  
Anonymous Anonymous said...

Nope...didn't buy Summit yet. I'm still looking for a place that sells the breed pictured here.

http://www.lulu.com/content/182757

Then I'm gonna take my dog to a Realtor there and ask to see some homes.

Pat

6/19/2006 11:47:00 AM  
Anonymous Anonymous said...

Whoops, I meant the Mob that Whacked NJ was a good story

Andy

6/19/2006 11:54:00 AM  
Anonymous Anonymous said...

the article on new jersey
sums up what we have all known
for years., New Jersey ,the pols.
have been looting the taxpayers
pockets to a point where its
unbearable for many.

6/19/2006 12:05:00 PM  
Anonymous Anonymous said...

Grim:

I saw sth recently half way decent in price: 2288358.

While I called, was told it was already in attonery review.

So anything, if they are a little close to the right price, will move.

That disappoints me. Because this house is still a little expensive.

Has it been on the market for a long time? also interested in knowing how much it sold for.

Thanks,

6/19/2006 12:13:00 PM  
Anonymous Anonymous said...

Anon 10:13am "The Mob That Whacked Jersey"

Excellent. I have found that the "redistribution of wealth" mentality is rampant. Example: I had a conversation with then State Assemblywoman Loretta Weinberg about NJ should be a "shall Issue" State like 38 other US States for concealed carry firearms, the long and the short of it is she told me that the guy who would try and rob me is a "victim of society" and I should just hand over what ever he wants. (rather than shoot the SOB).

6/19/2006 12:16:00 PM  
Anonymous Anonymous said...

New Jersey...How the left has won.

6/19/2006 12:20:00 PM  
Anonymous Anonymous said...

we should get that article on
new jersey into the hands of the pols who run this state.

6/19/2006 12:26:00 PM  
Anonymous Anonymous said...

Loretta Weinberg now is a NJ State Senator thanks to the direct help of Corzine...birds of a feather.

6/19/2006 12:28:00 PM  
Anonymous Anonymous said...

An executive at Toll Brothers recently said that "Mansions are called McMansions by people who can't afford them"

6/19/2006 12:40:00 PM  
Anonymous Anonymous said...

McMansion is the perfect name for them, isn't it?

What else should one call them?

"Estates?" Sounds like a trailer park.

"Big House?" Well, maybe?

The only other reference better suited than McMansion would be Nahbpalms.

6/19/2006 01:22:00 PM  
Anonymous Anonymous said...

"The Mob That Whacked Jersey"

Such reckless taxing and spending will surely intensify the flight from a state that once drew residents from elsewhere in the U.S. The Garden State recorded the fourth-highest net domestic out-migration in the country from 1995 to 2000—losing 182,000 more residents to other states than it gained. Every one of the state’s 21 counties lost more residents to other states than it gained, a bleak contrast from the 1960 census, which estimated that Jersey had a net in-migration of more than 500,000 residents.

bts

6/19/2006 01:52:00 PM  
Blogger chicagofinance said...

Anonymous said...
An executive at Toll Brothers recently said that "Mansions are called McMansions by people who can't afford them"
6/19/2006 01:40:19 PM

or people with an innate sense of worth coupled with even the slightest modicum of taste

6/19/2006 02:05:00 PM  
Anonymous Anonymous said...

Now does anyone want to put
forth an opine,on who replaced
the net outflow?

Hint,,,Check the emergency rooms
at the local hospitals.

Press one for English,etc.

6/19/2006 02:21:00 PM  
Anonymous Anonymous said...

Hi,
I love this blog...I read it all the time. Somehow it has restored my faith...you know people using common sense. I love the comments from somebody on here about wanting more land and less house. The last five years I have been defending that point of view. I have more land than house. One big thing that really makes an impression on me is that where I live the people are in these houses and who knows how they can afford it!!!!!! Most people it seems to me (35 and under) are really living an artificial climate controlled life here in my neck of the woods. What happened??? Does anyone ever go outside anymore? You might think I am a nutter but on a hot humid day my house is cool. One big reason is I have left half of my lot treed. Trees cool off the summer heat. I never use the air conditioning. My dog is a chow dog they are covered in fur and she is a sweetie. She keeps cool in the shade and she digs a little earth up and lets the cool dirt cool her off. I also love Bob's rants about house prices etc. You have to stand up for common sense. Don't buy the hype and buy a big house and expensive car. Be Smart!!!!

6/19/2006 04:23:00 PM  
Anonymous Anonymous said...

LOL. That City Journal piece? From one of the most widely discredited right-wing think tank's vanity publication?

Please, you'll have to do better than that. Or at least find an article that doesn't cite Bret Scundler as an authority on anything that doesn't have to do with high school football...

6/19/2006 04:25:00 PM  
Anonymous Anonymous said...

the only problem Darling
is its true and you know
it.

6/19/2006 06:31:00 PM  
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