Source : Business Times - 17 Feb 2009
Developers building smaller and cheaper houses in US now
A year and a half ago, when Len Axinn started building Sweet Woods, a new 10-home cul-de-sac community of 2,600 to 3,350 square foot McMansions in Port Jefferson Station, New York, shoppers were so scarce ‘we had cobwebs growing over our model doors’.
To pique interest, Mr Axinn, a managing partner in the Ronkonkoma, New York-based Island Estates, recently came up with a new, scaled-down 2,100 sq ft version of the house.
‘Now we get activity every week,’ Mr Axinn said, trying to meet the subdued market ‘with a model that appeals to the scaled-down desires of the customers’.
The newest house, which he is marketing from plans and not a model home, is a traditional centre-hall Colonial with three bedrooms instead of four. It has been stripped of fancy finishes, and instead has plastic laminate countertops and vinyl flooring in the kitchen, and ceramic floors in the bathrooms. Moldings are optional.
The house is priced in the low to mid- US$500,000s; the four larger and fancier original models ranged from the mid- to upper US$600,000s.
In building smaller and leaner, Mr Axinn is acknowledging a new reality on the suburban landscape: the big house is losing lustre.
‘The marketplace is definitely saying price is the No 1 consideration,’ he said.
In other words, ‘modest’ is the new ‘lavish’.
According to Stephen Melman, director of economic services for the National Association of Home Builders, a home growth trend that lasted more than three decades is starting to reverse. In 1973, he said, the average house size was 1,660 sq ft; in 2007, it was 2,521 sq ft (though there were blips during economic downturns in 1982 and 1991).
Last month, a survey indicated that 88 per cent of developers were building and planning smaller homes, and that 89 per cent were planning on emphasising lower-priced models.
‘Sheer size isn’t No 1 right now,’ Mr Melman said, emphasising that buyers are ‘clearly looking for value’. ‘How about right- sized, well-organised and efficient?’ he said.
In the third quarter of 2008, the average square footage of new homes dropped about 7 per cent, to 2,438 sq ft, from 2,629 sq ft in the second quarter, according to Mr Melman.
The expense of maintaining a large home is ‘forcing folks to seek smaller homes, apartments and condominiums - once a stepchild of the Long Island market’, said Eric Alexander, executive director of Vision Long Island, a ’smart growth’ group. ‘It costs a lot to have four or five bedrooms, three bathrooms.’
Beyond energy bills, all that space incurs ‘a massive amount of taxes’. A survey by Vision Long Island in 2007 indicated that 50 per cent of residents in suburban Nassau County, New York, and 44 per cent of Suffolk County, New York, residents showed a preference for living in denser downtown centres.
‘By default, that means smaller living spaces,’ Mr Alexander added.
Demographics are also playing a role. ‘The ageing baby-boomer population is looking at options as to where they want to live post the ‘big house’,’ he said, ‘and the Gen X market wants to live near activity centres.’
Ira Tane, president of the Huntington Station, New York-based Benchmark Home Builders, has been building single-family homes since 1984. They increased in grandeur over that time - with wireless home theatres, remote-controlled gas fireplaces in the master suites, and granite countertops, Viking stoves and sub-zero refrigerators in the kitchens - until a year or so ago.
‘Signs of conspicuous consumption are no longer cool,’ Mr Tane said.
His last McMansion sold in 2007 for US$1.7 million. After building that 6,500 sq ft Huntington home, Mr Tane scaled back a nearby project to 3,500 sq ft from 5,000 sq ft. It sold for US$1.2 million late in 2007.
‘People were starting to not be looking for these huge houses,’ he said.
Plans for a new five-bedroom, three-and-a-half- bath home have been reduced by a bedroom and a bath, so that he can price it in the US$900,000s. ‘The million-dollar price range becomes a barrier,’ he said.
Tom and Clara Datre, a husband-and-wife building team based in Ronkonkoma, have also toned down their projects. The 57 homes for which they just received approvals in Remsenburg, New York, and Speonk, New York, will weigh in at 3,600 sq ft, not the 4,000-5,000 sq ft originally planned.
Recently, the Datres built more than 100 ‘affordable’ homes, including 1,600 sq ft ranches and Colonials in Islip, Brookhaven Riverhead in New York state for the Long Island Housing Partnership.
‘The way this economy is right now,’ Mr Datre said, ‘I don’t think people will be able to afford the bigger homes anymore.’
Marc B Spector, a principal in the Woodbury, New York-based Spectorgroup, an architectural firm, said that larger great rooms are becoming smaller family sitting rooms, and home theatres are being incorporated into the family room. Additionally, his-and-hers bathrooms in the master suite are out, and the kids have to share, though double vanities are still de rigueur.
Instead of 7,000-12,000 sq ft houses, Mr Spector is designing 4,500-6,000 sq ft houses on properties that can hold much larger ones. Last year, he said, he completed a 4,200 sq ft house on an acre in Roslyn Estates, New York, ‘that could have been 6,000-plus’. ‘We made a conscious design together to go smaller,’ he said.
Though he isn’t sacrificing the bells and whistles, ‘a lot of families are realising, ‘I don’t need this much space, to manage, to live in, to maintain’ ‘.
The push towards smaller is not just dollar-driven, however.
Michael Forst, owner of Forst Construction in East Hampton, New York, has been encouraging clients to shrink their dream homes from 8,000 sq ft to 6,000 sq ft, for green reasons.
‘My goal is for people to have less of a footprint on the planet,’ Mr Forst said.
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