Tag Archives: single-family homes

Toll Brothers still moving forward

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While some may claim that the McMansion era is over, one of the prominent builders of some of these homes is still moving forward. Here is an update on Toll Brothers:

Luxury-home builder Toll Brothers has rebounded impressively since the start of October, along with its industry. The stock has risen by two-thirds and now trades at 71 times forward earnings estimates.

This is the case even with a reported quarterly loss announced Monday:

Toll Brothers Inc. swung to a fiscal-first-quarter loss as fewer deliveries and increased cancellations weakened revenue for the luxury-home builder.

But the company, known for its sprawling suburban homes and high-end urban condos, said it was optimistic because contracts were the highest for any first quarter in five years. It also sees recovery along Florida’s east coast and in Phoenix, markets hard hit by the housing crash…

Revenue dipped 3.6% to $322 million. Analysts expected a per-share profit of two cents on $361 million in revenue, according to a survey conducted by Thomson Reuters.

It sounds like some are optimistic that the housing market is turning a corner or has already reached its bottom. On the other hand, it sounds like there is still a lot of potential volatility. Here is a mixed report:

Homebuilders have struggled to compete as foreclosed properties sell at a discount and the U.S. unemployment rate remains above 8 percent. Toll Brothers depends on people selling their homes and buying its more expensive residences.

Sales of previously owned U.S. homes rose in January to an annual pace of 4.57 million, the highest level since May 2010, the National Association of Realtors reported today from Washington. The results were below the median forecast of 4.66 million by 74 economists surveyed by Bloomberg…

Toll Brothers’ earnings miss wasn’t “significant,” because it was caused by the longer period needed to complete high-rise condos in New York, which accounted for its most profitable sales, Chief Executive Officer Douglas Yearley Jr. said on Bloomberg Television today.

“This is the best we’ve felt in about five years,” he said on “Street Smart” with Trish Regan. “For the first three weeks of February, our orders are up significantly. We’re seeing deposits up. We’re seeing traffic up.”

My translation: we are still far from clearly positive results in the housing market.

I don’t know how many houses the biggest builders build but the figures from Toll Brothers are intriguing. Toll Brothers attracts a lot of attention but they “delivered 564 homes in the latest quarter, down slightly from 570 homes a year earlier.” This is not a lot of homes. I assume Toll Brothers gets more attention then because they tend to build high-end homes?

New homes getting bigger, greener

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Buried underneath a story about a Generation Y home was some interesting information about the new homes of 2011: they are getting bigger and greener.

“Homes are getting bigger,” said Rose Quint, the NAHB’s assistant vice president for survey research. She said the average home completed in 2011 had 2,522 square feet, up from 2,381 the year before. “On average, new homes have more square footage and are getting more expensive,” Quint said.

It’s a seeming anomaly, considering the economy. But the key to the size resurgence lies in who built new homes last year: The economy favored those with wherewithal and who were moving up the housing food chain…

And about that environmental awareness that’s supposed to be at the heart of consumer demand these days (I heard variations on the phrase “green is the new granite countertop” no less than five times in three days here): It depends on who’s asking the questions, apparently.

McGraw-Hill Construction, a trade publisher and researcher, released a survey during the conference that painted the green share of residential construction as booming, having increased from 2 percent in 2005 to 17 percent in 2011. Further, it should reach 29 to 38 percent of the market by 2017, representing $87 billion to $214 billion in business, the report said. Driving this demand, McGraw-Hill said, is consumers’ desire to reduce their energy bills…

Grail Research, a Cambridge, Mass., firm that studies green-related issues, contends green may be less of a revolution than an evolution, if even that. The researchers found that the number of consumers with preferences for green products is decreasing as the recession continues, and that significant numbers of green consumers have switched back to conventional products.

These might be viewed as competing trends but I have argued that I think these could actually go together: Americans want space as well as greener (and perhaps greener as normal) features.

The new figures about housing size from 2011 are fascinating because the downward trend in recent years has been hailed by many as a sign that Americans have gotten their spending under control, lowered their expectations, and are moving away from sprawl and McMansions. But the 2011 figures suggest that there are still people who want (and can pay for) large houses. I’ve suggested before that housing sizes will go up when the economy improves and perhaps this is some evidence for that.

I wonder if we can reconcile different reports about consumers and green products by suggesting that green is simply becoming more normal. It is one thing to add the latest or expensive green features such as solar panels or rainwater retrieval systems. It is another thing for all new homes to have very insulated windows or an efficient furnace, improving features that all homes have to have anyway. What this would mean is that it would be more difficult to market a home as green and ask a premium price as opposed to having some expected or more basic green features. The phrase “green is the new granite countertop” fits with this idea: if you want your home to sell, you will need to have some basic green features.

Turn your house into a billboard

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Perhaps you have seen cars or trucks that have been turned into a billboard but what about a house? A marketing company thinks there is a niche here, particularly with homeowners who need some extra cash:

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Overview of housing size data for the United States

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Atlantic Cities has a collection of data sources regarding housing size in the United States. A few quick thoughts after seeing this data again:

1. I’m not quite sure why the title of the article references McMansions when it is really about the average size of the new home. Is a home bigger than the average automatically a McMansion? Or is the demand for truly big homes lower? Why isn’t there data about the actual number of large homes being built?

2. I still wonder whether this drop is the beginning of a long plateau or slow drop or more of a reaction to a down housing market. Since the housing market may not recover for years, perhaps it is a bit of both but I wonder what would happen if the economy really improved. What would stop people with the resources to build big, green homes?

3. As long as most of the new housing starts in the United States are in the suburbs, will the average home size drop much at all? Or would we have to see a large population shift toward the cities or denser areas near the cities for this to happen?

A $1.1 million eco-home that is not a McMansion

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A new house on the Parade of Homes tour in the Twin Cities area is made out of repurposed materials, is not a McMansion, and cost $1.1 million:

“With Excelsior one of the oldest communities in the state, we wanted the house to fit in the neighborhood. This looks like a 1910 farmhouse but it has the energy efficiency of 2012. It’s only a two-bedroom, 2,500-square-feet house; it’s not a McMansion,” he said.

It was built with as many recycled, reused, repurposed materials as possible. The floors, walls and ceilings are made of wood from an 800-square-foot fallen-down cottage that was on the property and from wood salvaged from another dismantled house. The roof is made of old tractor tires and sawdust, although it “looks like wood shingles,” said Shelby.

“It’s triply certified: USGBC Green Building Council LEED Platinum, Minnesota GreenStar and Builders Association Twin Cities,” said Shelby, who noted the residence has a HERS score of 18. “HERS, Household Energy Rating System, benchlines a house built to 2012 code at 100 for energy efficiency. … My house has a HERS score of 18, so it is 82 percent more efficient than a standard house.

“It’s geo-thermal, with electricity coming mainly from solar panels on the garage roof. I’m going to have very few bills; in fact, I become a utility with my solar because when I’m not there and not using electricity, it’s producing electricity and sending it back into the grid, and then they have to pay you the same prices they charge for a kilowatt hour.”

This sounds like an interesting house but several things stand out:

1. A 2,500 square foot home for $1.1 million? I assume that someone might want to buy it for its green features but it reinforces the idea that truly being green is only attainable by people with money.

2. It is intriguing that the owner wants to be very clear that this is not a McMansion. Why would he feel a need to do this? It sounds like he wants to emphasize that while the house was expensive and has some upscale green features, it doesn’t stand out in the historic neighborhood.

3. The owner later says later in the story: “This is not just some fancy home. This is a statement of an ethic…Truthfully, I’ve been standing on my soapbox 15 years talking about these things. I thought it was about time to walk the talk.” This home is not just a place to live; it is a personal statement, one couple’s testament to how they think they and others should live. This feeds into the larger American idea that your house (and many other consumer objects) should express your individuality and your ideas.

Judge rules against man who wanted to claim Texas McMansion through adverse possession

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Last July, I wrote about a Texas man who claimed he could occupy an abandoned McMansion and then claim possession of the home after a certain amount of time. His “adverse possession” case has moved forward as a judge ruled that the bank can indeed remove him from the home:

Anyone who was rooting for the man who used Texas’ adverse possession law to snag a McMansion for only $16 will be bummed to hear that he’ll be forced to leave the home after Bank of America claimed ownership of it. Drat!

Kenneth made waves in Flower Mound, Texas in July when he claimed the right to take over a $340,000 home in suburban Dallas, after filing a simple document and paying $16 to the city. He cited a law which said he could legally take possession of the house after living there for three years. His neighbors grumbled while he watered the lawn and paid utility bills, and now a judge says he has to move by Valentine’s Day.

The Associated Press says Bank of America can boot Kenneth, as they hold the lien on the house. Foreclosure was completed last month, says BOA, and now it’s time for Kenneth to vacate the premises…

“I’m just thankful for Flower Mound and Denton County for following the proper lawful procedures,” [Kenneth] said. “I went in doing this strictly by following a lawful process.” And now that the process has played itself out, he says, “I’m neither happy nor disappointed.”

I would venture to guess that Bank of America and some other people paid special attention to this case in order to forestall efforts by others who might be interested in using adverse possession to claim homes.

It would be helpful to have more information here:

1. Are the neighbors now happy that the home has officially gone through foreclosure? Did Kenneth make peace with any of the neighbors?

2. Does Bank of America have a quick timetable for moving this house to the market and selling it or will it be another home that languishes while the bank decides whether to accept offers?

3. Has Flower Mound changed its rules yet, like perhaps upped the $16 application fee, in order to avoid cases and attention like this in the future?

4. Where will Kenneth live next?

Still building some big houses in a down housing market

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Builders are still building some big houses even in a down housing market:

It may be politically incorrect, but some builders are putting up larger houses, not smaller ones, according to Builder, a trade journal.

Spurred by inexpensive land costs, builders in many markets are able to erect McMansions for only a small percentage of what they cost before the housing market implosion…

These places are largely big boxes, so they aren’t likely to win any design awards, says the magazine’s editorial director, Boyce Thompson. But they’re decked out with enough sizzle that they are hard to resist, whether or not you need the space.

“Even as average new-home sizes have fallen slightly across the country,” the magazine reports, “builders in some markets are finding a profitable and underserved niche of buyers who need or want a house as big as a mansion with the price tag of a cottage.”

Four quick thoughts based on this:

1. The comment that it is “politically incorrect” to have a big box house is fascinating. This has happened in a relatively short amount of time, roughly 5-6 years.

2. The comment that these houses “are hard to resist” is also interesting. Americans do like their housing deals. Even if people shouldn’t buy these homes, who can pass up a great deal?

3. There is still some money to be made in new houses in the right circumstances.

4. What is the quality of these homes? McMansions have that term partly because people argue they are mass-produced and made of cheaper materials meant to impress rather than to last.

Six predictions for American suburbs in 2012

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Since this is the time of year for predictions, here are my six broad predictions for American suburbs in 2012:

1. The suburbs will continue to be the space of choice for Americans even as critics argue they are bland, environmentally untenable, and ultimately unsustainable.

2. At the same time, because of the economic crisis, continuing trends in design, and different tastes among Millennials and retiring baby boomers, suburbs will be pursuing denser projects with more certain long-term outcomes.

3. Many suburbs and other local taxing bodies (school districts, etc.) will struggle to find revenue. The budget deficits at the federal and state levels will continue to trickle down. Many communities will struggle to fund basic services.

4. Minorities, immigrants, and lower-class residents will continue to move to the suburbs and more strongly challenge the image of suburbs as lily-white havens. Some suburbs will struggle to adapt. Wealthier suburbs will continue to look for ways to limit these changes.

5. The issues of funding and revenues will trump concerns like providing social services for new populations, being environmentally-friendly, and providing affordable housing. Some will argue these communities would likely stonewall these concerns regardless.

6. Regarding single-family homes: McMansions will continue to be disparaged, the size of the average new home will drop again, the problems with foreclosures will continue, the President and Congress will continue to express how the single-family home is the foundation of the American Dream, and affordable housing will still be unpopular.

(Note: I’ve written about these trends throughout 2011 and I plan to keep writing about them in 2012. While these predictions are somewhat vague, it is difficult to describe trends across all suburbs as they are a varied lot.)

Learning about the Republican presidential contenders from their (McMansion) homes

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Perhaps showing that drawn out process for nominating a Republican candidate has gone on long enough, the New York Times takes a new angle in looking at the possible candidates: looking at their homes. And the topic of McMansions comes up:

Where better to look than their homes, to get a sense of their style, and what it might tell us about what they value and how they live? …

The New York Times enlisted interior designers and a design psychologist to scrutinize photos and share their thoughts, political leanings aside, on what the homes reveal about the candidates.

Some points are obvious to an untrained eye. There are a lot of big new houses, for example. “I hate to call them McMansions — it gives McDonald’s a bad name,” said Thad Hayes, a New York designer whose many projects have included restoring the Palm Beach mansion of Estée Lauder. “But with so many of them, you can’t tell where they are. They’re totally anonymous.”…

The candidates all seem to be striving for an American colonial look — there is not a fixer-upper or modernist glass oasis in the mix. And many aspire to the formality of the White House — there are lots of wood-paneled studies and use of a pale gold that Benjamin Moore would surely name Oval Room Yellow.

And read further for more specific critiques of each candidate’s home.

Several quick thoughts:

1. I wonder how much the quip about McMansions is prompted by the houses themselves or political leanings of the commentators. Many of the comments about these houses are similar to those generally made about McMansions: the homes are big, boxy, poorly proportioned, full of flashy luxuries, look traditional but aren’t really, and inhabited by social strivers. Perhaps more liberal candidates or officeholders do actually have more “authentic” homes but I wonder…McDonald’s is better than these homes?

2. Despite my thoughts in thought #1, scholars have noted how important the shift was from seeing the home as a necessity to seeing the home as an expression of oneself. While there are varying opinions about how this should be carried out, homes are like many consumer objects: we want them to help express our individuality.

3. While it is noted that the candidates generally have traditional-looking homes, is this really any different than most Americans? How many people really live in or desire more unique designs? (It might also be interesting to think about what is a “traditional” look – does stucco count? Mediterranean?)

4. Perhaps this is too obvious to note: this doesn’t contribute much to our knowledge about the candidates except to remind us that most (all?) big-name politicians have big homes.

(Side note: others, like The Atlantic, have picked up on the McMansion aspect of this story.)

What you lose by having a 3-4,000 square foot home compared to a 5-6,000 square foot home

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If you are going to move into or build a 3-4,000 square foot home instead of a 5-6,000 square foot home, what do you lose? A game room, among other things:

Customers increasingly are opting for alternate uses for the room that used to house the pool table and bar. Real estate agents and builders cite a number of reasons, from people’s tastes changing, a sign of the economic times or a baby boomer generation growing older, as reasons.

Going without a game room is not necessarily a sign that people are entertaining less, but more an indicator that custom homebuyers are making more practical decisions about what they want their living space to contain, says A. Faye Scoller, of the Scholler Group Prudential PenFed Realty…

“Additionally, we are seeing a lot less of the ‘keeping up with the Joneses’ in terms of the total square footage,” Booth notes. “Where we used to build 5,000- to 6,000-square-foot McMansions, now customers are reducing their space requirements, and now custom homes, with the same high-end amenities and extras, are in the 3,000- to 4,000-square-foot range.”

A smaller footprint comes from eliminating the game room and dining room and making one large and airy great room that can serve multiple uses, Booth said.

Both home sizes are large but you would have to make changes if you lose several thousand square feet.

The most interesting part of this to me is that although these houses may be smaller, this one builder suggests the smaller homes still have the “same high-end amenities and extras.” People may not want space but they still want the luxury items associated with a big home. At the same time, does this mean that a pool table and a bar are no longer desirable status symbols?