Tag Archives: single-family homes

Time magazine: “The Return of the McMansion”?

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Time echoes some other commentators: new data suggests we may be headed back toward bigger houses and McMansions.

When the real estate market imploded and ushered in the Great Recession, one of the biggest casualties was the size of our homes. For years, we’d been building increasingly large homes because, well, we could — and because we assumed all those two-story foyers and master suites could only go up in value. The recession put a screeching halt to this trend: After peaking at 2,521 square feet in 2007, the average size of a new home has dropped, a trend many industry observers thought would continue…

Census data shows that the average size of a new home built last year was 2,480 square feet, the first increase after three years of successive declines. Nearly 40% of new homes built last year had four or more bedrooms, a return to the all-time high reached in 2005 and 2006. And nearly 20% have three-car garages, an increase following two years of declines…

This reversal is unexpected. In a 2010 report, the National Association of Home Builders speculated that the trend of smaller homes might be due to a secular shift and that our preference for small houses would continue after the recession ended. “Part can also be attributed to trends in factors like the desire to keep energy costs down, amounts of equity in existing homes available to roll into a new one, tightening credit standards, less emphasis on the pure investment motive for buying a home, and an increased share of homes sold to first-time buyers,” the report says. “Not all of these trends are likely to reverse themselves immediately at the end of a recession.”

This illustrates the problems of making sweeping predictions on recent data: it is really difficult to predict long trends. Does the 2011 data now suggest we are going back the other direction toward bigger houses? What if the figures go down slightly again in 2012?

A second issue: moving back to bigger houses doesn’t necessarily mean that they are McMansions. The backlash against McMansions has been stiff in the last decade so these new big homes might be quite different. Perhaps they have emphases on customization (a concern of Sarah Susanka and the “Not So Big House”), more traditional looking neighborhoods (a concern of New Urbanists), and are greener and more sustainable homes.

What happens when there are 65 million vacant homes in China

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A review of a new book about China leads with this information about the recent “building binge” in China:

This spring in Beijing, I asked a businessman an obvious question about the risks to China of an economic crash-landing, to which I got a less obvious reply. It is impossible to travel around China without concluding that the place is in the grip of a building frenzy. In less than a decade, China has pumped around $4 trillion into property; tens of millions of houses and apartments as well as Ozymandian public buildings and factory estates – and what hits the eye is how much of it all stands empty. Across the country, uninhabited concrete blocks scab the land, not only in the megacities of the eastern seaboard but also in the sleepier southwest; from filthy mining towns in Henan, all the way to entire ghost towns in Inner Mongolia. With an estimated 65 million homes standing vacant, residential construction last year was still running at a rate of five times demand.

Dwarfing even the $2 trillion borrowed for the Railway Ministry’s high-speed networks since 2008, and the thousands of kilometres of 4–6 lane toll roads with barely a vehicle on them, China’s building binge is the most striking example of what Prime Minister Wen Jiabao famously, but impotently, denounced in 2007 as the country’s “unbalanced, unstable, uncoordinated and unsustainable” model of economic development. Now, with house prices and sales sagging in response to government restrictions aimed at deflating history’s biggest ever property bubble, and with local governments as deep in bad debt as the developers, I asked the businessman what was to prevent the bubble actually bursting, in a spectacular financial explosion?

His answer was that it wouldn’t happen. A lot of these empty apartments, he said, had been bought by Chinese families as investments, and they would patiently hang on to these speculative purchases because interest on savings was derisory. Secondly, although some developers would go to the wall, the bubble would simply not be allowed to burst for fear of public anger as well as economic chaos. China had massive reserves if need arose, he said, and would not hesitate to bundle nonperforming loans off into a state “bad bank”. Its plans to build 36 million “affordable” homes by 2015 would also help to offset faltering private sector demand. When in a hole, in other words, the Party keeps digging.

This isn’t the first piece I’ve read suggesting that we could be headed toward a pop of the property bubble in China…

“McMansions making a comeback”!

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Several sources picked up on the latest data from Trulia that suggested more Americans are interested in bigger homes. With a headline of “McMansions Are Making a Comeback,” here is what US News & World Report said:

After greed and excess torpedoed the housing market a few years ago, Americans understandably began favoring more modest homes instead of pricey palatial abodes.

But it seems old habits die hard.

Reverting back to a “bigger is better” mentality, interest in mega-mansions 3,200 square feet and larger has almost doubled from a year ago, according to new data from real estate website Trulia. About 11 percent of today’s house hunters say they want their own McMansions, up from just 6 percent last year…

About 16 percent of those surveyed said their ideal home was in the 2,600 to 3,200 square feet range, but according to listing data from Trulia, homes currently on the market skew much smaller, with only 10 percent of homes listed falling within that range. Nearly 60 percent of homes listed are 2,000 square feet or smaller, which means many house hunters’ hopes will be disappointed.

More from the Wall Street Journal as architects are also noting the trend:

Big homes are back in style.

That’s the headline from the American Institute of Architects’ first-quarter Home Design Trends Survey set to be released Thursday. Eight percent of the 500 architecture firms responding say square footage of homes increased in the first quarter, up from 5% a year ago. This change, the biggest year-over-year jump since the survey started in 2005, ends a multiyear march toward smaller homes driven by the housing implosion…

But today’s buyers are different from those seen during the buy-as-big-as-you-can boom. “People don’t want bigger homes just to have bigger homes,” says Steve Ruffner, present of the Southern California division for KB Home, one of the nation’s largest home builders. “Buyers show up with calculators. They actually calculate cost per square foot. They really understand what they’re getting for the money.”

Interestingly, 45% of architects reported more interest in single-story homes, up from 35% a year ago. The result is the largest percentage since 2005, according to the AIA. During the easy credit housing boom, builders quickly inflated home sizes to generate more profit. An easy way to do that was to tack on a second – or third – floor, making single-stories hard to come by in some communities. While more of today’s buyers seek more space, they don’t necessarily want to deal with stairs. Aging boomers are also more likely to seek a one-story address.

We will see how this plays out. Of course, the story is more complex than “Americans want bigger homes again” or “the housing recovery has begun.” And it will be fascinating to watch how these new, larger homes are marketed and perceived: if buying a McMansion is really a moral choice, can there really be a good defense for such a purchase?

Australians love the suburbs

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Few countries in the world embrace the suburbs in the same way as Americans. One close contender is Australia: an Australian professor describes their enthusiasm for the suburbs:

Historian Graeme Davison asked if Australia was the first suburban nation. He knew the scientific answer didn’t matter. We were, whatever the carbon date, among the most enthusiastic of peoples to embrace the suburban promise. Despite the mythic outback imagery that Australia has vigorously exported and exploited, the record shows we like suburbs more than any other way of living. We enjoy living together more than we care to admit – but not too closely. The suburb struck the perfect balance between collective security and individual possibility. The great quilt of this human accord hugs the continental coastline. Sea change and tree change means no change, really – more suburbia, only in new places.

This has some interesting parallels to the American case: Americans liked their frontier imagery (though the mass urbanization of the 1900s weakened this). Americans like community (see the oft-quoted passages from de Toqueville about voluntary participation) but have always held this in tension with individualism. Americans like the balance between being close to urban amenities and yet having some yard in a smaller community. I’ve wondered before how much the fact that both the US and Australia are British settler nations factors into this embrace of the suburbs.

A reminder: just a few years ago, Australia passed the United States in having the largest average new houses in the world. However, I suspect since the average American new home has once again gotten larger, the US is back at the top of this list.

Ninety percent of Americans still say “homeownership is part of the American dream”

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Commentators may be touting the virtues of renting but according to a recent poll from the Woodrow Wilson Center, a clear majority of Americans still think homeownership is a worthwhile goal:

Voters personally put very high importance on homeownership. When asked to indicate on a scale of zero to ten where zero means homeownership is not at all important and ten means it is extremely important, voters rate the importance of homeownership as a mean score of 8.597.

-Fully 62% of all voters rated homeownership as a ten out of ten. Those most likely to indicate homeownership is extremely important are voters in states with lower unemployment rates as well as rural (71%) and urban (67%) areas.

-Importance placed on homeownership increases with age where just 53% of 18-44 years old indicate it is extremely important but 64% of those 45-64 and 72% of those over 65 years old would rate it as a ten out of ten…

When asked to consider the importance of homeownership compared to five years ago, one-third of voters feel homeownership is more important (33%) and 51% feel it is just as important. Only 12% of voters say homeownership is less important than it was five years ago…

A majority (54%) of voters believe that “increasing homeownership should be a national priority.” By comparison, voters universally (90%) believe that “homeownership is part of the American Dream.”

Considering some of what I have read in recent years, this is overwhelming support for homeownership. The economy may be bad, foreclosures may be more common, some 15 million homes have underwater mortgages, and homeownership rates are trending down, but it will take a long time before Americans give up the dream of homeownership. It is interesting to note in the figures above that younger American adults see homeownership as less important. It is also interesting to note that there are more mixed opinions about how much the government should be involved with the mortgage industry or promoting homeownership.

This is based on telephone interviews with 1,000 “registered ‘likely’ voters.”

A NPR story on these poll results suggests the dream of homeownership runs deep in American history:

The term “American dream” became popular in the 1930s, says Bob Shiller, a housing economist at Yale. “But I associate it with the suburban movement that developed after World War II,” he says…

The American tradition of actively encouraging home- or farm ownership dates back even further, he says.

“That was the real American dream — [owning] your own farm. So we had the Homestead Act in the 1860s that made it possible for anyone with modest means to buy a farm,” he says.

Still earlier, the French historian Alexis de Tocqueville noted the importance of homeownership in his book Democracy in America, published in the 1830s and based on his travels around the country.

“He noticed the independent streak of Americans and their desire to own their own farm and their own home,” Shiller says. “He thought that that represented a kind of anti-feudal feeling — that each person in this country is an independent agent. There is no landlord or lord with his thumb on you.”

History doesn’t change overnight though feelings about homeownership could change within a generation or two.

Baby Boomers want to downsize from McMansions but still want the amenities

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Even if more people are interested in smaller houses, will they be willing to forgo the amenities of larger houses? This article suggests the Baby Boomers going to Florida want to go smaller but still want features:

The baby boomers who invented the “McMansion” now say they want to scale down, while still having everything just so. For boomers beginning to trickle into Florida, this means medium-size, maintenance-free retirement homes that still feel spacious, especially when it comes to storing all their stuff.

Builders who study what this generation wants have come up with innovations like “snore rooms” to preserve bedtime peace and “technology centers” to keep them connected. Behind a yen for such marketing frills is a solid demand for costly amenities: spas, fitness centers and dedicated golf cart paths to nearby shopping…

This generation, famous for saying one thing and doing another, promises to keep it up as its members age. Boomers say they intend to downsize, but appear to change their minds once they see what their dollars will buy in a post-recession Florida…

Inside, the standard villa layout has been refined to boost the coolness factor boomers crave. Generous windows, some of them bays and bump-outs, flood the rooms with natural light. Tiny foyers feature the elegant architectural detail of a stately manor, and lead immediately into wide, off-center angles of open-planned space. Pocket doors allow one- or two-bedroom guest suites to close off from the rest of the living area, so grandchildren can nap or play.

Custom options include a cocktail pool, or “spool” — bigger than a spa, smaller than a pool — and a shared office with his-and-her workspaces for boomer couples telecommuting from home.

Several factors are at play here:

1. Housing is relatively cheap in Florida, particularly if retirees are coming from New York, Washington, Boston, and to a lesser extent, Chicago. Perhaps these retirees can’t resist getting the “best deal” when they realize they have the money to buy a little more?

2. What people expect in retirement. It sounds like these retirees expect a certain standard of living when they move to Florida. If they had fewer choices or less money, what would they ask for? Overall, these retirees have the money and the wherewithal to pick up and leave for Florida.

3. This is big business. Companies like Dell Webb need retirees to buy their homes so they are going to offer what people want.

In these cases, it sounds like buying less (particularly in square footage) doesn’t necessarily mean buying less.

Wired: “Living Large in a 130-Square-Foot Apartment”

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Tiny houses are getting their share of attention these days and I find it hard to resist seeing how people design and live in small spaces (in a country where new homes are roughly 2,500 square feet). Check out this gallery and description of  “Living Large in a 130-Square Foot Apartment“:

The apartment was once the master bedroom of a larger apartment, which should give you a pretty good idea of its postage-stamp size. The idea was to separate the room to create a small studio that could create rental income…

The smartest design trick was to create a split-level floorplan. Baillargeon and Nabucet divided the studio into two levels by building a platform for the kitchen and bathroom, which creates the illusion of separate spaces without using any walls or dividers. The only true partition between living and dining is a long, bar-height shelf that doubles as a functional table for eating. A smart take on the traditionally depressing breakfast nook…

The bed is always a challenge in a studio space. You don’t really want a mess of comforters and pillows in the middle of your living space, and no grown person should really be sleeping on a futon. Baillargeon and Nabucet brilliantly bucked the Murphy bed concept with a bed on wheels that slides elegantly beneath the kitchen platform. The bed can also do double duty, sliding halfway underneath to create the illusion of a couch, thanks to the addition of decorative pillows.

A coffee table, stored along the wall while the bed is in use, slides elegantly out in front of the couch. The convertible bed/couch is Ménard’s favorite feature, as it allows for maximum square-footage for socializing. “It’s a multi-faceted space which can be adapted for watching a movie, working, inviting friends over or cooking.”

Looking at the pictures, the split-level plan seems to make a big difference. So when can Ikea sell all of this as a package? I wonder how much an architect or designer can make for putting together a space like this…

Another thought: can tiny dwellings only really work in communities that emphasize or at least allow socializing in public/private spaces? How much time does the average tiny house dweller spend in their unit compared to people with bigger homes? I could see this as a marketing pitch for tiny houses: you’ll be forced to be more social in public!

Most people buy greener houses for the cost savings

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At the end of a larger discussion about builders constructing more green houses, an industry insider talks about why people buy green homes:

Q: Over the years, industry studies have shown that consumers’ interest in green building has tended to focus on energy conservation; they want to reduce their heating, cooling and appliance costs.

Do they still see green building through that lens of energy efficiency? Are they more motivated to build green for the sake of being green?

A: They’re still energy-oriented. In the most recent study, about two-thirds of consumers who requested green features in their homes said they wanted either to lower energy use or to save money.

In addition, consumer health concerns related to indoor air quality have moved up rapidly among the reasons for requesting green. But concern for the environment was a major issue for only about one-fourth of consumers requesting green.

While it will be interesting to see what green features the new homes of the next few years have, I think this hints at a larger issue with green products: people are more willing to invest in them upfront (in the case of a house) or buy them if they offer savings in the long run. Even with houses, this insider suggests that 30% of people wouldn’t pay extra for green features. The motivation here is not necessarily the earth or all of humanity but rather costs for individuals. This is a very different ideology and seems rooted in a consumeristic mindset.

But what happens when going green requires higher prices – like gasoline or other energy prices – without obvious cost savings for individual consumers? This is a much harder sell.

Recent uptick in sales of McMansions?

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Here is an argument that new home sales of recent months might be driven in part by larger homes, sometimes known as McMansions:

Data released on Wednesday shows that sales of newly built homes rose 3.3% in April from a month prior and 9.9% from a year ago. While the figures do not disclose the size of these new homes, home builders credited the McMansion side of the spectrum. That’s a reversal from recent trends: During the recession the size of homes got smaller, shrinking 3.4% to 2,382 square feet, according to the US Census. But last year that size jumped 5.2% to 2,505 – the largest in at least four years. In many regions of the country, homes are even larger.

Home builders say the trend toward larger new homes picked up more this year. Michael Villane, president of Lead Dog Builders, a custom home builder in Rumson, N.J., says he’s currently building homes with sticker prices of $1.5 to $4 million, up from the $1.3  to $1.5 million his clients were commissioning a year ago. While the average size of homes in the region is 3,500 to 5,500 square feet, he says the orders he’s received this year are for 7,000 plus-square feet homes. Though there’s no official definition of the word, many define McMansions as new homes larger than 3,000 square feet.

In some cases, home builders are enlarging homes even if clients don’t ask for it. Michael Dubb, CEO and president of The Beechwood Organization, a New York-based home building company, says his firm is building houses with larger kitchens, higher ceilings, and overall more spacious rooms in an attempt to appeal to buyers who might be on the fence about buying a new home. By building bigger without raising the price, he says, the company is hoping to increase its sales. (He says they’re not downgrading quality, but rather cutting into their profits in order to make more sales.)…

Requests for large new homes come at a challenging time for the overall new home market. New home sales hit a 51-year low of 307,000 last year, according to the NAHB. That figure is expected to jump 18% this year, but it would still be way off its peak of 1.3 million homes in 2005.

If I had to guess at what is behind this, here is what I would say: there is a bifurcation in the current housing market. On one hand, you have a large group of potential homebuyers who are looking for smaller homes. One recent book I reviewed calls this the “demographic inversion” as young adults and retiring Baby Boomers look to downsize and purchase in denser areas. Proponents of these trends argue that the Americans of the future are looking for a different kind of homeowning experience in the future. On the other hand, you still have a decent number of wealthy homebuyers who are now moving out of a hibernation stage brought on the economic/housing crisis several years ago. They are looking to buy homes similar to what they would have bought ten years ago but now feel financially stable enough to pursue this.

The article doesn’t mention this but I wonder if this is also at play: new home sales are at the lowest stage in 51 years so this new push for larger homes among the wealthy is really raising the average in a way that we haven’t seen in the past. When those at the lower economic spectrum get back into buying homes (though some would argue that they won’t – perhaps we’re moving to a rental society), the average figures for the whole country might come down or stabilize a bit.

Builders constructing denser, more urban developments in the suburbs

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USA Today reports that more builders are constructing denser suburban subdivisions:

The nation’s development patterns may be at a historic juncture as builders begin to reverse 60-year-old trends. They’re shifting from giant communities on wide-open “greenfields” to compact “infill” housing in already-developed urban settings…

“It’s the kids (ages 18 to 32), the empty nesters (Baby Boomers with no kids at home),” says Chris Leinberger, president of Smart Growth America’s LOCUS (Latin for “place”), a national coalition of real estate developers and investors who support urban developments that encourage walking over driving. “These two generations combined are more than half of the American population.”…

Most major builders have created “urban” divisions in the past five years to scout for available land in already-developed parts of cities and closer suburbs — even if it means former industrial and commercial sites or land that may require environmental cleanup…

Even traditional communities built on greenfields are transforming. In Southern California’s Inland Empire, an area where housing prices are lower and appeal to first-time buyers, Brookfield is building Edenglen in Ontario. The homes are built on smaller lots — 4,500 square feet instead of the more conventional 7,200 square feet — and priced from $200,000 to $300,000.

This phenomenon has been noted by a number of commentators in recent years though I wonder if it will last.

A few other consequences of this for suburbs:

1. How will existing suburban residents respond to dense, infill projects? I would guess that a good number of suburbanites would object to these dense projects being built near them, spoiling their neighborhoods.

2. Related to the first question about NIMBYism, how will these new developments change the character of existing suburbs? If a community is used to wide suburban streets and big lots, narrow lots and denser housing could change things.

3. This article hints at this but this could also be a product of the age of many American suburbs. Outside of the suburban fringe or exurbs, many suburbs not have at least a few decades of history and perhaps little to no open land (reaching build-out). If these suburbs want to continue to grow (boosting revenues and fees as well as prestige), infill development might be the only choice.

4. This article makes a common claim: certain generations (emerging adults and baby boomers) desire more urban kinds of housing. However, I wonder if it less about generational differences and more about the changing structure of American households. Is the increasing number of single households (which might be located more in these generations) really driving this? If so, this would be have bigger effects as the American suburbs have traditionally been communities build around family life and child-rearing.