Tag Archives: single-family homes

Putting together the “IKEA house”

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Popular Mechanics looks at how the new prefab “IKEA house” was designed:

Russell started Ideabox in Salem, Ore., more than six years ago, but he suddenly gained a following—thousands and thousands of emails in just a few days—when he unveiled the first-ever Ikea-inspired prefab home at a Portland home show last week. Contrary to what you may have read in the blogosphere, the Aktiv house isn’t actually from Ikea, sanctioned by Ikea, or in any way sold through Ikea. However, the folks at the local Ikea in Portland certainly played a major role in coupling Russell’s love of small-space prefab buildings with Ikea’s design-savvy, space-saving systems. The collaboration yielded a home filled entirely with Ikea products.

As generations of cramped apartment-dwellers can attest, part of the Ikea allure (besides the fact that its furnishings are cheap and pack flat) is that the broad range of design options lets you get the most out of a small space. For example, Russell says, the variety of Ikea kitchen options gives customers design flexibility and the ability to mix and match Ikea products in the space, choosing for both style and cost. He designed the 745-square-foot one-bedroom, one-bathroom home around specific Ikea components, and the designers from the local Portland store worked directly with Ideabox to ensure the builders had all the parts they needed (there was no room for the frustration of a missing bolt on a commercial-scale project). In all, he says, building an Aktiv will cost about $86,500…

The major difference comes in the delivery of the home, forcing designers to engineer the structure for travel. “When you are picking up the house and driving it down the freeway, sheer loads are very important,” Russell says. Thus, the house, just like a car, must be built with as unified a body construction as possible, ensuring that the home stays together in the face of winds on the highway, or transfers from the production shop to the truck or from the truck to the foundation. “There is a little more stealth factor,” Russell says about the sleekness of the design.

Once the home gets delivered and is safely resting on the foundation, it is as close to a “plug-and-play” model as possible, requiring only hookups to the water, power, and sewer connection points, since all the wiring and plumbing was already done in the production facility. From there, the customer is free to walk into their new Aktiv space.

The house looks decent enough and I’m sure the connection to IKEA will attract many. However, I wonder who would buy this: as some of the commenters have suggested, is this basically a fancier mobile home?

In some ways, I think this house isn’t innovative enough. A couple of thoughts:

1. What about having a neighborhood of these? How would that look and would people want to live there?

2. Can it be expanded or is this the one-bedroom for the living alone culture?

3. I’ve always been really intrigued by the 250 square foot living spaces that are featured in the IKEA stores. Why not work with a really small space (and you don’t have to go to the really small size of a tiny house) and be more innovative?

4. People can already buy smaller homes from a variety of sources – for example, you can buy the materials for a 1,471 square foot home from Menards (from the most recent weekly ad):

Granted, you still have to put the home together and it doesn’t have the IKEA name but the Copeland does have two floors and three bedrooms. So why go for the IKEA house?

h/t Instapundit

Not much of a price premium for net-zero-energy homes

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As more homebuyers seek out green homes and want to reduce energy bills, they can purchase a net-zero-energy home for a price that may not be as high as you think:

The Spencer’s new home is part of a niche, though growing, segment of the U.S. housing market — net-zero-energy homes, many of which use solar energy to achieve net-zero-energy use vs. consumption. In the sun-sparse days of winter, energy consumption often exceeds generation, but in the sunny days of summer, energy generation often far exceeds consumption.

As of February 2012, 37 homes have been rated net-zero-energy or better on the industry-standard Home Energy Rating System e-scale of the U.S.-standard auditor. This number could grow 1,000 percent or more in 2012 if projects continue as planned.

“Interest has been off the charts,” said Todd Louis, vice-president of Tommy Williams Homes, the Florida-based building company that built the Spencers’ home. So far, the company has built and sold four, and has plans to build 35 to 40 more in 2012. The price of their net-zero-energy homes are still $30,000 to $40,000 higher than those that are not net-zero-energy, said Williams, but that margin is dropping with a decline in photovoltaic costs. The Spencers paid $250,000 for their home…

Shea Homes has long featured extremely energy-efficient designs, though the upgrade to solar panels could be costly — around $30,000, said Asay. He and his wife were considering the upgrade, but when the announcement was made that the new net-zero homes, with solar, were only $7,000 more than the previous base model, they jumped: “Sign us up.”

This approach is different than another housing approach that has generated buzz: passive houses are homes that are so insulated that they use a ventilator to move air from inside to outside (and vice versa – see some diagrams here). The energy costs in these homes are very low. In contrast, net-zero-energy homes have higher energy costs than passive homes but then offset the energy usage. In this article, the homes have solar panels (I wonder if this could be done in other ways – wind turbines on the roof?) which also means that the homes have to be in climates and locations with more sunlight. If the costs for doing this are reasonable and introduced completely at the beginning (meaning it can be spread out across the life of a mortgage), I could see how this is attractive for homebuyers.

I expect that we will see more homes like this in the future: beyond wanting to reduce energy bills, more homeowners appear to be interested in green homes. The housing industry is starting to warm to this idea and there are a number of ways that new homes can adapt: more sustainable materials, being a passive house or a net-zero-energy house, downsizing or right-sizing, and being in denser neighborhoods where homeowners can drive less and use less land.

Builders and Home Depot prepared to offer more multigenerational homes

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As part of a larger argument that millennials still will prefer homes but perhaps in a different form, Joel Kotkin suggests several builders and Home Depot are prepared to offer more multigenerational homes:

Some companies, such as Pulte Homes and Lennar, are betting that the multi-generational home — not the rental apartment — may well be the next big thing in housing. These firms report that demand for this kind of product is particularly strong among immigrants and their children.

Lennar  has already developed models — complete with separate entrances and kitchens for kids or grandparents — in Phoenix, Bakersfield, the Inland Empire area east of Los Angeles and San Diego, and is planning to extend the concept to other markets. “This kind of housing solves a lot of problems,” suggests Jeff Roos, Lennar’s regional president for the western U.S. “People are looking at ways to pool their resources, provide independent living for seniors and keeping the family together.”

But much of the growth for multigeneration homes will come from an already aging base of over 130 million existing homes. An increasing number of these appear to being expanded to accommodate additional family members as well as home offices. Home improvement companies like Lowe’s and Home Depot already report a surge of sales servicing this market.

A top Home Depot manager in California traced the rising sales in part to the decision of people to invest their money in an asset that at least they and their family members can live in. “We are having a great year ,” said the executive, who didn’t have permission to speak for attribution. “ I think people have decided that they cannot move so let’s fix up what we have.”

Perhaps multigenerational housing is the future though I wonder if this housing would prove so popular in better economic times.

How much extra can a builder charge for a multigeneration house and how much space does this new house have compared to a new home built for a nuclear family?

Here is one of the Lennar multigeneration home that features “The Home Within a Home”! Looking at this floor plan, it looks like it features just three extra rooms: a “next gen bedroom,” a bathroom, and a “next gen living space” with kitchenette located at the front of the home and that can be close doff from the rest of the house. The home is 2,250 square feet, smaller than the average new home, and is priced at $273,000. Here is how Lennar describes the house:

“We have created this plan to allow for dual living situations without sacrificing comfort – it’s literally a home within a home,” stated Dale Billy, Division President.

The economy has dramatically contributed to the decision to build this type of product. Many aging parents have seen their retirement investments diminish during recent years and many college-age children are finding it necessary to move back home. With housing typically being the largest part of the monthly budget, moving in together is an option many are embracing. “The opportunity for families to share a mortgage makes a lot of economic sense for many families,” added Billy. “Lennar’s Next Gen – The home within a home, is essentially two homes with one payment, making living together affordable, comfortable and flexible to your needs.”

Each NEXT GEN? suite includes a separate entrance, living room, kitchenette, laundry and private bedroom and bath. Lennar designed this unique floorplan to be incorporated into the main home floorplan in a way that allows it to be a separate space but also offers direct access from the main house, depending upon the family’s needs.

I’ll be watching for these in the Chicago area. Does Home Depot sell a prefab or easy to construct addition to attach to an existing home to make it a multigeneration home?

Some housing not so cheap when you factor in transportation costs

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Plenty of people may move to where the cheaper housing is located but this could come with higher transportation costs:

In Chicago’s transit-rich Ravenswood neighborhood, where there is an average of one automobile per household and 42 percent of commuters use transit, monthly transportation costs averaged $751 in the five-year period studied, the center determined.

Households in Marengo in McHenry County incur an average of $1,324 in transportation costs each month, the study found. Each household in Marengo, where transit ridership is less than 1 percent, also logs an average of 24,438 miles per year in their cars, versus 12,150 miles annually in Ravenswood.

When people are looking for a place to live, taking into account housing and transportation costs changes the affordability outlook significantly, said Scott Bernstein, the center’s president…

[From the print edition:] Some 69 percent of neighborhoods in the Chicago area are considered affordable under the traditional definition of housing affordability: rent or mortgage payments consuming no more than 30 percent of household income, the study said. But only 42 percent of the neighborhoods are considered affordable when housing and transportation costs are measured, it said…

The study also found that it is more difficult for a typical household in the U.S. to find an affordable place to live compared to a decade ago because incomes increased about half as much as transportation and housing costs since 2000.

This provides some data to back up Joel’s claim from earlier this week: life is cheaper (and perhaps better?) without a car.

What I find fascinating about this is that this report ties transportation costs to the idea of affordable housing. Typically, we only think about the cost of the housing itself but if you built affordable housing in the middle of a corn field 90 miles west of Chicago, those housing units won’t really help anyone.

At the same time, this is a trade-off many Americans seem willing to make: you pay less for your house and then pay more for transportation costs over time. Perhaps because the house is a significantly larger “one-time purchase” (you have repeated payments but they are somewhat fixed and you have already psychologically taken possession of the house even though you don’t own it) people can justify then paying more for transportation over time because the money trickles out and the costs are more variable. Plus, if you think of the home as one of the key pieces of the American Dream and Americans should love to drive anyway, this all could make some sense.

This is also a reminder that the cost for entry to the suburbs is not just about finding somewhere to live which often requires a sizable down payment and a mortgage. In order to get anywhere, whether it is a job or store or recreation area or church, one needs a car in the suburbs and one needs to have extra money on hand to deal with this. Without being able to pay for insurance, gas, maintenance, and somewhere to park (which is factored into a parking space or the driveway/garage that is factored into the mortgage), there is plenty of extra cost involved with having a car. This reminds me of a story I read recently about an affordable car program in Wisconsin where the state or some agency was providing cheap but reliable cars to people to help cover these growing and important transportation costs.

Reasons young Americans are not buying houses at the same rate as prior younger generations

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Derek Thompson shows that younger Americans are not buying homes at the same rates as previous younger generations:

When older generations wonder what’s the matter with Millennials, they often judge their younger cohorts against such financial and social benchmarks as finding a job, getting married, and buying a home. These observations often come wrapped in weak science — “blame Facebook for their indolence” — or dripping with judgment — “blame their parents for making them weak.” The science is weak, but the observations are true. Fewer young people are finding jobs. Fewer young people are getting married. Fewer young people are buying homes.

Between 1980 and 2000, the share of late-twenty-somethings owning homes had declined from 43% to 38%. The share of early-thirty-something home owners slipped from 61% to 55% in that time. After the boom and bust were over, both rates kept falling. The rate of young people getting their first mortgage between 2009 and 2011 was chopped in half from just 10 years ago, according to a recent study from the Federal Reserve.

The reasons Thompson gives for this decline: rising student debt, lower (delayed?) rates of marriage, limited wages, and housing prices have increased.

Two things that I like about this:

1. Generational talk and “common sense” about the differences is indeed “weak science.” Many people provide anecdotal evidence (my children or students do this, etc.) tied to individual traits (they don’t have the same work ethic, etc.).

2. Because of this “weak science,” we do need to examine how structural forces affect generational behavior. Thompson suggests that broad factors in economics and society have pushed this generation of younger Americans into different actions.

One thing I think is missing here: there seems to be an assumption here that if the economics and social factors were right or similar to the past, this younger generation would buy houses at similar rates. What about the cultural component, the idea that a younger generation of American doesn’t buy into the traditional American Dream in the same way as previous generations? Of course, these structural factors can influence this rejection or adoption of the American Dream: if it is simply more difficult to buy a home at a younger age today, then people might pursue a different vision.

But I think there is growing evidence (see here and here as examples) that this younger generation genuinely values different goals than previous generations and owning a house is just not the same priority. Perhaps they have different values like wanting to be in culturally exciting areas (the creative class thesis). Attaining this and owning a home are not mutually exclusive but most suburbs would not fit this bill. Perhaps they do not desire long-term debt (the common 30 year mortgage) in a rapidly changing world or they want more freedom to be able to move and respond to changes in job markets and cultural and relational shifts. Perhaps they don’t want to have to maintain a home and would rather spend their time elsewhere. Perhaps they explicitly reject the materialistic or consumeristic approach they see in previous generations and instead prize friendships and fulfilling careers. If they do want homes, they want different kinds than in the past (see here and here) and perhaps don’t think many homes reflect their desires.

This is worth paying attention to: will the idea of the American Dream and the need to own a home change dramatically in the years to come because of both structural and cultural shifts?

Comparing the size of new American homes to those in France, Spain, and Britain

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As the size of the average new American home dropped in recent years and then increased again in 2011, it is helpful to keep in mind how American homes compare to those in Europe:

By the way, even if American homes do shrink slightly, they’ll still be much bigger than homes abroad. A 2009 survey from Britain’s Commission for Architecture and the Built Environment found that the average new home built in the United States has twice the floor space of those built in France and Spain and is three times as large as the average new British home.Am

To put this in perspective, this means that the average new home in Britain is roughly 800 square feet and new homes in France and Spain are about 1,200 square feet. Is this what American exceptionalism looks like these days?

This reminds me of watching House Hunters International on HGTV. When you have an American looking to purchase a home in Europe, they often say they need space though the square footage or acreage is rarely quantified. In contrast, Europeans on the show seem to expect that European homes will be smaller and are willing to deal with it. You can often see quite a difference in expectations: Americans expect more personal space and distance between them and neighbors. This is not necessarily because Americans are unfriendly; one recent survey put the United States at the fifth most friendly country. Perhaps it could be tied to how much stuff Americans expect to have. Regardless, more Americans appear to relish the idea of having private space within the home in ways that is not possible or not wanted in other cultures.

 

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:

Continue reading →

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?