Tag Archives: single-family homes

Predicting the “great senior sell-off” to come

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Here is an update on one event that might be coming down the road: the time when the Baby Boomers decide to sell their homes.

Nelson pointed to the affordability issue as well as the fact that about a quarter of Millennials prefer urban housing, such as condos or townhouses, over the detached suburban homes that were the Boomers’ preferred habitat. Younger buyers, he said, will also be looking for starter homes—smaller than the big Colonials and split-levels that line America’s cul-de-sacs. “We can predict the next housing crash,” he said at the time. “That’ll be in about 2020.”

Four years later, Nelson tells CityLab that that he believes the sell-off will still occur—but later, in the mid- to late 2020s. This has to do with people deciding to defer selling their homes, hoping to get a better price later than settling for a lower price now. “Home values in much of the country are still less than those before the Great Recession of 2007 to 2009,” he says. Prior to the recession, the typical homeowner would sell a house about every six years. “It was like clockwork,” says Nelson. “This drove a lot of planning and development projections.”…

Nelson predicts that the fringe areas surrounding cities will bring the biggest headaches for Boomers looking to unload their houses. Because Millennials will be looking for small homes when they finally start to buy in larger numbers, the sprawling McMansions of the exurbs won’t be desirable to many of them. “The Boomers in the exurbs are going to be in a real pickle,” says Nelson. “Even in a dynamic market like Washington, D.C. or other booming cities, the market for those homes is going to be soft.”…

But many analysts do agree on one thing: More housing will need to be built for Millennials—and it needs to be scaled to their desires, not their parents’s. “Millennials are likely to prioritize different features in their homes, such as greener materials or in-law suites,” says Molinsky. And according to the Harvard Joint Center’s projections, nearly 90 percent of those looking for homes in 2035 will be under 35 or 70 and over—and both groups tend to buy less square footage.

I suppose we’ll see what happens. I tend to think that Millennials might not be as transformative as some have suggested in regards to where they want to live or in what kinds of houses they inhabit. At the same time, there may be fewer Millennials than Baby Boomers in the market for housing – both due to different sizes of the various cohorts as well as the limited purchasing power of some Millennials  which means it could take some time for those Baby Boomer dwellings to find buyers.

It is also interesting to consider what might happen if these homes, particularly those on the metropolitan fringes, can’t be sold. Would they be demolished? Converted? The community retrofitted? Drop to a low enough price that they become very attractive to certain groups? We have plenty of history as a country of people spreading out but not much experience with any serious contraction.

Zoning trade-off: privacy vs. adverse effects

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The conclusion of Sonia Hirt’s book Zoned in the USA sums up the advantages and disadvantages of a zoning system that privileges the single-family home:

Arguably, zoning – the kind of zoning that makes explicitly private space the formative compositional element of America’s settlements – does deliver the gift of privacy to American families. But put all the other arguments mentioned in the previous paragraphs together, and one begins to wonder whether the original promises of zoning were either highly suspect from the beginning or have since been turned on their heads. Paradoxically (from the viewpoint of zoning’s founders), we may not have more pollution and worse public health with our current zoning that we would have if we had modified our land-use laws more substantially over the last hundred years.

As Hirt discusses, residents can have their own private homes – the largest new single-family homes in the world – but that comes at a cost of traffic and commuting, worse pollution and using more land, and worse health as well as some unrealized dreams of zoning including reduced crime. Some would argue that the privacy is overrated as well: compared to many other countries, Americans have given up on public life.

While it is easier to imagine mixed uses in dense urban neighborhoods – imagine Jane Jacobs’ vision of a bustling mixed use New York neighborhood – it is harder to imagine mixed use or zoning throughout the vast expanses of American suburbs. Even New Urbanists have tended to design neighborhoods or shopping centers dropped into suburban settings rather than the whole fabric of suburban communities. From the beginning of American suburbs, there was the idea that the urban dweller was escaping to a cottage in nature. The home out there offered refuge from people, dirt, and bustle. Today, this legacy lives on when suburban residents oppose certain land uses near their homes for fear of a lower quality of life and subsequently reduced property values.

Ultimately, would the American suburbs even exist without the fundamental desire for privacy?

Closing on a house feels like…

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Based on my limited experience and scholarly interests, here are some possibilities for what closing on a house can be:

–Fulfilling the American Dream of homeownership. On the positive side, owning your own property and providing space for a family. On the less positive side, establishing your class status.

-Agreeing to a sizable debt to a large financial institution. On one hand, you probably couldn’t buy that home without a long mortgage (thank goodness for the 30 year loan). On the other hand, you don’t really own your property for a long time and those mortgage payments just keep coming. Overall, a home is going to be the single largest investment/outlay of money for many.

-The end of a complicated process. I’ve seen several surveys suggesting many Americans dislike applying for mortgages (here is one example). It is one of those things in life many people don’t do more than a few times and it often requires a lot of paperwork (both to submit and to read).

-The start of a new era. (1) Even with the mobility of Americans and our relatively low attachment to places, we get used to the physical structures in which we live. (2) A new home often means new social arrangements as we navigate changing families and new neighborhoods and communities.

-Keeping another house occupied. Obviously, no one wants a lot of vacant properties – with lots of discussions of this in recent years involving foreclosures and particular locations like Detroit – but we can push the idea further: just how long will American homes last? Will post-war suburban homes be worth rehabbing when they hit 40-80 years of existence?

-Helping a community continue to exist. With your home purchase, you are making a commitment, if not socially (you could just retreat to the private world of your new home), then at least through your taxes. Even if we put too much emphasis on high population growth as a sign of success, communities can’t afford to lose too many residents and taxpayers.

Explaining why Americans desire larger homes

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Here are several possible explanations for why Americans want bigger houses:

But there’s no real “normal’’ when it comes to desired home size — except the persistent perception that size equates to prestige, said Dak Kopec, director of Design for Human Health at Boston Architectural College. “Throughout all cultures, bigger is better and associated with wealth and power.’’…

“It’s clear that the American dream of living in a big house on a large lot has not gone away,’’ said Ralph McLaughlin, Trulia’s chief economist…

One reason American homes are so big, Powell argued, is that we have more disposable income. “You’re not just buying a 2,000-square-foot house, you’re also going to fill it with a whole bunch of stuff,’’ she said. The larger house and its contents soon become your new baseline, she said, as the furniture, paintings, and lamps you buy blend into the background to become part of your environment. “And then you can only upsize from there if you choose to keep your possessions.’’…

Dunn speculates that a larger home could boost happiness if it reduces conflict. “If you have a house that enables you to get along well with your spouse, if each person has a little of their own space, that might reduce conflict,’’ she said, “but I suspect there are seriously diminishing returns on that.’’

With these four factors – the status of a larger house, the American Dream, more disposable income and more stuff, and finding more happiness – perhaps we could argue that it requires some effort for Americans to live in a smaller place. It is not impossible to do so and certain factors, such as living in an expensive metropolitan area like New York City or San Francisco, can override the cultural conditioning to have a larger house. But, the American inertia may just be to have a larger dwelling.

We could also add some additional factors leading to larger homes in the United States:

  1. Suburban sprawl leads to more room for larger homes.
  2. Americans privilege private spaces over public spaces.
  3. Over the decades, the government and other actors helped make it easier for more people to own homes.
  4. Americans don’t necessarily need the space but they like the flexibility that more room provides such as having a hobby room or having children, parents, and/or relatives live with them.

Sales of luxury homes continue to slump

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Several new reports suggest the luxury housing market is not doing so well:

Sales in the Hamptons, Aspen and Los Angeles fell by double-digit percentages in the fourth quarter, as the supply of unsold homes grew and prices came under pressure, according to market reports Douglas Elliman and Miller Samuel Real Estate Appraisers & Consultants.

Separate research from Redfin found that luxury properties nationwide under-performed the broader housing market for the eighth consecutive quarter. The supply of homes priced at $1 million or more rose 1 percent in the fourth quarter, while the number of $5 million-plus homes was up 15 percent.

The article starts with the suggestion that the election limited sales. But, that doesn’t do much to explain the issues over eight quarters. Perhaps there is a bit of a luxury home bubble? I mean, how many multi-million dollar properties can be bought and sold? I also feel like I have seen numerous news stories in recent years about the latest home that is breaking the record for asking price. But, such homes are only within reach of the wealthiest people.

It would be interesting to hear what experts think this slump means. Builders shifting away from super expensive homes to cheaper homes? The wealthy looking to invest in other kinds of real estate? Any problems with vacant properties in these communities?

A zoning paradox: sacred residential spaces are dependent on their market values

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The last page of Sonia Hirt’s book Zoned in the USA lays out a key paradox in the American zoning system:

Isn’t it ironic that American residential space is so sacredly residential (so protected from intrusion through land-use law, that is) only because it is so commercial (because it is an object of trade rather than an object of our sentiments)?

Perhaps this another piece of evidence that single-family homes are one of the biggest objects of American consumption as well as key pieces in the American economic system.

Builders turning from McMansions to smaller housing units?

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Alongside recent news of reduced price premium for McMansions, data from the second quarter suggests builders are constructing more townhouses and smaller units:

Reversing years of ballooning home sizes aimed at upper-bracket buyers, builders have begun refocusing their efforts on entry-level and more modest-sized homes. According to new data from the National Association of Home Builders, the median floor area in new-home starts dropped during the second quarter of this year by about 3 percent.

Meanwhile, townhouse construction has been increasing fast — up 25 percent over the past year as of the second quarter. New townhouses, which typically are smaller and cost less than detached single-family homes, now account for 13 percent of all single-family starts, the highest it’s been since 2008.

NAHB chief economist Rob Dietz told me the quarterly decline is no fluke and the trend is likely to persist. “What you’re seeing is the beginning of builders trying to expand the market” and pull in first-time and other buyers who are frustrated by the lack of affordable alternatives in the resale arena, he said. Many shoppers, especially those with or planning on children, now find growing opportunities in townhouse and entry-level detached-home communities in the suburbs and exurbs compared with closer-in, higher-cost homes.

Critics of McMansions as well as advocates for affordable housing have been asking for years why builders have been focusing so much of their efforts on larger homes. The short answer: such homes can generate a lot of profit while building smaller homes lead to less profit per unit. Yet, this article also suggests that demand has increased for smaller homes as entry-level buyers haven’t been able to find much thus far.

One point to note: even as builders and buyers are looking for smaller spaces, I suspect builders will do what they can to raise the values/prices of these units. Smaller doesn’t necessarily mean that much cheaper once numerous features are added and locations are considered. This doesn’t necessarily mean that builders are going to be constructing bare bones, cheap units – unless they are significantly farther away from city centers and job centers.

Claim that McMansions have proportionally lost resale value

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A recent study by Trulia suggests McMansions don’t hold their value:

The premium that buyers can expect to pay for a McMansion in Fort Lauderdale, Fla., declined by 84 percent from 2012 to 2016, according to data compiled by Trulia. In Las Vegas, the premium dropped by 46 percent and in Phoenix, by 42 percent.

Real estate agents don’t usually tag their listings #McMansion, so to compile the data, Trulia created a proxy, measuring the price appreciation of homes built from 2001 and 2007 that have 3,000 to 5,000 square feet. While there’s no single size designation, and plenty of McMansions were built outside that time window, those specifications capture homes built at the height of the trend.

McMansions cost more to build than your average starter ranch home does, and they will sell for more. But the return on investment has dropped like a stone. The additional cash that buyers should be willing to part with to get a McMansion fell in 85 of the 100 largest U.S. metropolitan areas. For example, four years ago a typical McMansion in Fort Lauderdale was valued at $477,000, a 274 percent premium over all other homes in the area. This year, those McMansions are worth about $611,000, or 190 percent more than the rest the homes on the market.

The few areas in which McMansions are gaining value faster than more tasteful housing stock are located primarily in the Midwest and the eastern New York suburbs that make up Long Island. The McMansion premium in Long Island has increased by 10 percent over the last four years.

Read the Trulia report here.

Interesting claim. After the housing bubble burst, some commentators suggested that Americans should go back to not viewing homes as goods with significant returns on investment. Instead, homes should be viewed as having some appreciation but this happens relatively slowly. This article would seem to suggest that return on investment is a key factor in buying a home. How often does this factor into the decisions of buyers versus other concerns (such as having more space or locating in the right neighborhoods)? And just how much of a premium should homeowners expect – 190% more than the rest of the market is not enough?

This analysis also appears to illustrate both the advantages and pitfalls of big data. On one hand, sites like Trulia and Zillow can look at the purchase and sale of all across the country. Patterns can be found and certain causal factors – such as housing market – ca be examined. Yet, they are still limited by the parameters in their data collection which, in this case, severely restricts their definition of McMansions to a certain size home built over a particular time period. As others might attest, big homes aren’t necessarily McMansions unless they have bad architecture or are teardowns. This sort of analysis would be very difficult to do without big data but it is self-evident that such analyses are always worthwhile.

How much of their home do residents use?

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An op-ed opposing Los Angeles mansionization suggests owners of large homes don’t regularly use all that space:

In “Life at Home in the 21st Century,” UCLA researchers tracked 32 middle-class Angelenos, trying to measure and analyze how we live today. One family in particular they followed intimately, tracking how they moved around the house during the mornings, evenings, and weekends — when they were all home. The results were amazing: the family huddled around the kitchen and family room nearly all the time, leaving the living room, porch, and more than 50% of the rest of the first floor communal spaces almost entirely empty. The habit of gathering around the kitchen to eat, or huddling in front of the TV to watch, hasn’t changed much since the 1950s, but the average home size has — from 983 square feet in 1950 to more than 2,660 square feet today. Meanwhile, the average family size has shrunk and so has the average number of people living under one roof, from 3.3 in 1960 to 2.54 today.

See more about the book here. While the book appears to detail the heights of American consumerism (see this interview with one of the authors), it is interesting to consider how often rooms in a house are used. Are they really like office or store parking lots that tend to get used during certain work hours each day and then sit empty for more than half the day? Bedrooms operate that way during sleeping hours while gathering spaces – kitchens and family rooms – attract users in the evenings. Those hobby or storage rooms that are popular now – ranging from the man cave to a large closets – rarely see human activity. Could homes be made significantly smaller if the uses were combined or square footage was changed to reflect usage patterns? Or, should homes be built in a hub and spoke model around these key social spaces? On the other hand, American homes seem to privilege maintaining private spaces even if they aren’t used very much. The formal living room may be out but some homeowners seem to want private retreats (at least on TV, particularly in their bathrooms).

All of this gets back to you what homes are for in the first place. From decades ago to today, American homes often represent an escape from the outside world. A place to escape to with your family. A space where outsiders and the government cannot tread. Making such homes more communal is an interesting challenge when the homeowners need to be protected from forces outside the home.

Postwar suburban houses reviewed

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A review of two new books on postwar suburban homes points out some of the idiosyncrasies of the houses:

The one-story ranch loosened its belt and spread out, and the Split Level, that most American hippogriff of house hybrids, took flight. The origins of the split level are murky: it originally offered a small footprint and a means to make better use of sloped northeastern sites. But it soon spread to locations where neither item was a real concern. It was an easy means to reintroduce functional separations that residents soon realized were valuable: locating bedrooms a stairway away from living rooms wasn’t merely Victorian prudishness—it made good sense. Split levels also fueled the rise of that most suburban setting, the rec room, which was usually located in basements or lower levels and almost invariably a more informal children-oriented social space, frequently enabling the relative re-formalization of the main living room.That suburban building sited homes on big lots is not news, but what is worth noting, as Lane points out, is how the houses were designed in relation to those lots. The formal and inward-oriented facades of pre-war homes gave way to houses whose facades were dominated by the living room picture window, affording a glimpse not merely of one’s own yard but those of your neighbors. As Lane comments, “The windows looked out on the new landscapes that formed around them and also enhanced the perception of spaciousness so much desired by this generation.” The scenography was often repetitive, but it was open: As John Updike commented in Rabbit Redux, “now the view from any window is as into a fragmented mirror, of houses like this, telephone wires and television aerials showing where the glass cracked.”…

Distinctive design was rarest from the larger builders, but similar trends characterized a very wide swath of construction, despite an often complicated level of agency. Jacobs cites a National Association of Home Builders study in 1959 indicating that 38.3 percent of builders designed their own homes, 34 percent used a contract or in-house architect, 12 percent hired a designer of some sort, and 6 percent purchased blueprints through a commercial service. Countless independent and uncoordinated actors who end up producing a similar monotony is unfortunately often the story of America.

And my favorite part of this review:

Suburban building has long been reviled by sociologists and ignored by architects. As Lane comments, “scholarship has been delayed and disturbed by decades of neglect and dislike.” Some of that neglect and dislike is warranted: it’s hard to find all that much architectural distinction in the vast majority of suburban homes. Their general interchangeability discourages the kind of design interest that has given us many monographs on vernacular rowhouses and bungalows and only a handful on the ranch home. There are countless books on a dozen homes in New Canaan, Connecticut, but almost no books on the remaining thousands of homes there; that balance is mainly right—and yet.

Simply the sheer number of homes built in the decades after World War II meant that these design choices would be influential. With a massive housing shortage building up through the Great Depression and World War II, homes were needed quickly and the existing economic, political, social, and design forces led to these particular kinds of homes.

But, as a suburban scholar I agree that such homes have either gotten little attention or have been reviled. These homes were incredibly influential, even if they weren’t true Modernist structures or deviated too much from existing vernacular designs or weren’t designed by architects but rather were mass-produced. Much of the scholarship and commentary on these postwar homes is done from a critical, after-the-fact angle and with an implicit alternative vision of how an urbanized America might have turned out. There is some truth in all of these critiques: these suburban communities were racist (in that non-whites were typically not welcome), initially had particular visions of gender roles and family life, promoted consumerism and driving, and took up a lot of land without much thought of the consequences. At the same time, millions of Americans enjoyed their new homes and the opportunities that came with them.