What I suspected: new homes might be slightly smaller but buyers want more amenities

Here is a little evidence from the Hartford Courant of something I suspected might happen: people might buy smaller homes but this doesn’t necessarily mean they will be cheaper or have fewer amenities.

While “downsizing” may be the housing buzzword of recent years, not everybody’s doing it. And even those who are buying smaller homes are spending big on upgrades like granite countertops and hardwood floors, area builders say…

The houses may be slightly smaller than the 6,000-square-foot-plus “McMansions” of the past, but “people still want size,” according to Greg Kamedulski, president of the New England division of national builder Toll Brothers, which is building Weatherstone…

“It doesn’t necessarily have to be huge, the house,” said George Santos, sales and marketing director at Plainville-based By Carrier Inc. “A lot of people want new construction because they want to be able to customize the home the way they want it to be.”

“There has definitely been a shift in … the popularity of those very large houses in exchange for those relatively smaller homes but with the same amenities,” said Bill Ferrigno, president of Sunlight Construction, which recently completed Knoll Lane in Avon. Houses on Knoll Lane range from 2,700 to 3,700 square feet…

“People are very concerned with interior appointments — trims, a more sophisticated decorating package, numerous wall colors,” he said. “All these things cost more money, of course.”

So people know that having a home of a certain size is either unnecessary or is frowned upon (it may even be morally wrong) but having the nice interior features is still desirable. Perhaps this is because these interior appointments are not immediately apparent from the outside? Perhaps people now value their own experience of their home and what they want versus what they think people want to see on the outside?

Argument: growing income inequality reflected in “unseemly” larger houses

In his new book, Charles Murray (not a sociologist) apparently makes the case that the “unseemly” big houses in the American suburbs today reflect growing levels of income inequality:

He begins by noting that the distribution of income was far more compressed in 1963 than it is today. Back then, the median family income of professionals and managerial occupations was only about $62,000 p.a. in today’s dollars. Less than 1% of American families in 1963 had incomes higher than $200,000 p.a. and only 8% had household incomes higher than $100,000 p.a. (again, all figures in today’s dollars).

The housing of the time reflected the same degree of compression. Even the elite didn’t usually live in what we think of today as a mansion. He recommends viewing an episode of Mad Men to see the sort of house – remarkably modest by today’s standards – that the Drapers live in. That, he says, is “the kind of house that the creative director of a major New York advertising agency might well have lived in”.

In 1963, great mansions were something most Americans saw in the movies, not in person. Only the richest suburbs of New York, Chicago, and Los Angeles had entire neighborhoods consisting of mansions.

The nature of the change since then can be seen by driving around suburban neighborhoods where the affluent of the 1960s lived, such as Chevy Chase, Maryland; Belmont, Massachusetts; or Shaker Heights, Ohio.

Most of the housing stock remaining from that era looks nothing like the 15,000- and 20,000-square-foot homes built in affluent suburbs over the last few decades. No reproductions of French châteaux. No tennis courts. No three-story cathedral ceilings.

Interesting argument. I wonder if some other factors might also be at play here.

(1) Perhaps people today are more willing to spend their wealth on impressive houses. This could be the case if homes have become more important markers of status since the 1960s.

(2) Perhaps home builders weren’t building these types of homes on a large enough scale for more wealthy Americans to access them. The early 1960s is not that far removed from the under 1,000 square feet Levittown houses and the big builders (as opposed to more local or regional builders) were just taking off. In other words, there was no Toll Brothers yet. Additionally, you need lenders who would be willing to service more mortgages for bigger houses.

(3) Overall, all American homes increased in size over this time period. The average square footage of a new home was 1,660 square feet in 1973 and peaked at 2,521 square feet in 2007. It could be true that the top 10 or 20% of houses have really increased in size but on the whole, all new homes have gotten bigger.

(4) Another factor that might be overlooked here is that the wealthy in the 1960s tended to live with other wealthy people in suburbs or subdivisions and this is likely still the case today. Sure, Don Draper might have had a smaller home but Draper still lived with white-collar professionals. Even if their house sizes have really ballooned, one issue is that the wealthy still live apart from other Americans. Perhaps we should be more concerned with residential segregation than just the size of homes.

Smaller luxury homes: “I’d rather have a 3,500-square-foot house and have it make sense.”

Two home builders in Tennessee explain that they are building smaller luxury homes:

The luxury homes being built by Castle Homes are smaller than just a few years ago, Looney said.

“Not 8,000 square feet. Now the average is 4,500 square feet,” he said.

The custom home Colclasure is completing in Green Hills has about 3,700 square feet, and the open design almost eliminates hallways.

“The days of the McMansion with 6,000 square feet and you live in 2,000, the days of people wanting those houses, are long gone,” Colclasure said. “I’d rather have a 3,500-square-foot house and have it make sense.”

This is a decent reduction in size: moving from 8,000 to 4,500 square feet is a 44% drop while going from 6,000 to 3,500 square feet is a 42% drop. At the same time, these are still large homes. Most new houses do not have 4,500 square feet and even 3,500 square foot homes are 1,100 square feet above the 2010 average. Is this enough of a size reduction to not have these homes labeled as environmentally unfriendly or McMansions?

I really want Colclasure to explain what he means by this final statement: what does it mean for a large house to “make sense”? Does that mean that the large houses of ten years ago don’t “make sense” even if today’s builders built those same homes? Does this mean that luxury homes now come with more features rather than just size? Does it mean that builders have grabbed onto the idea that they can’t just sell impressive size?

A surplus of 5 million McMansion in the United States?

In the middle of a review of the Foreclosed exhibit at MoMA, a housing analyst makes an interesting statement about the surplus of housing currently in the United States:

It’s still easier to borrow for a McMansion, even though the U.S. has about five million too many of them, according to Arthur C. Nelson, a housing analyst who directs the Metropolitan Research Center at the University of Utah.

Nelson was also cited in stories about turning McMansions into affordable housing that I wrote about back in October 2011. In that story, it was said that there “America [is] saddled with about 30 million more homes on large lots than the market needs.” Whether the number if 30 million or 5 million or even 1 million, that is still a large glut of homes that must be hampering the housing market.

I wonder if Nelson is defining a McMansion just by square footage. This is the most basic trait of a McMansion when the term is generally used though it is unclear how big a home has to be in order to be called a McMansion. Is 3,000 square feet big enough? Is 10,000 square feet more of a mansion than a McMansion? We could also ask whether a home this size necessarily is a McMansion as it may be an older home or it may have more architectural quality than a McMansion is assumed to have.

 

Unusual 60,000 square foot house in northern Ohio

Big houses tend to draw attention but particularly eccentric big houses. Here are some of the features of an unusual 60,000 square foot home in northern Ohio:

A wealthy inventor conceived of a home with whimsical, underground ‘streets’ built to scale and inspired by those he’d seen in Georgetown, Paris and Savannah. Above ground, it featured a private beach and marina sculpted into the shores of Lake Erie. And a helicopter pad…

“It takes four-and-a-half hours to show this property,” said Scott Street of Sotheby’s, the listing agent for the Waterwood Estate, which is now listed on the Vermilion real estate market for $19.5 million.

The property sits on 160 acres, boasts three-quarter miles of frontage on Lake Erie and contains a series of “pods” connected by glass corridors that were navigated by scooters and golf carts…

Jacobsen used his trademark “pod” style design to give the design more flexibility and allow it to evolve as Brown wanted other things added. The entire home is a series of 20 castle-like concrete buildings connected by glass corridors and each structure is topped with a slate pyramid.

Perhaps one could argue that any 60,000 square foot home is unusual but this has many intriguing traits.

Why build this property on Lake Erie?

What builders say the homes of 2015 will look like

If you are looking for big changes in the homes of 2015, you probably won’t find them. But here is what builders say they do expect to change for the new homes of 2015:

According to the results of the study, surveyed home builders expect new single-family homes to check in at an average of 2,150 square feet. Current single family homes measure around 2,400 square feet, which is already a decrease from the peak home size in 2007 of 2,521…

Other things that make up the home of 2015? No more living room. According to the survey, 52 percent of builders expect the living room to merge with other spaces and 30 percent believe that it will vanish completely to save on square footage. Instead, expect to see great rooms — a space that combines the family and living room and flows into the kitchen.

Expect to see more:

  • spacious laundry rooms
  • master suite walk-in closets
  • porches
  • eat-in kitchens
  • two-car garages
  • ceiling fans

Expect to see less:

  • mudrooms
  • formal dining rooms
  • four bedrooms or more
  • media or hobby rooms
  • skylights

Many of these changes reflect a desire for builders and consumers going green. Smaller space means more efficient heating and cooling. Ceiling fans distribute heat evenly while skylights, on the other hand, release heat.

The two big changes proposed here aren’t revolutionary. Particularly if the economy remains in the doldrums, homes will decrease in size. The real question is what would happen if the economy really picked up again – would builders go back to larger homes? Also, 2,150 square feet is still pretty large and perhaps is more of a reflection of the smaller number of people per home these days. The formal living room hasn’t been too popular for a while and this could also be behind the drop in home sizes. Of course, compared to the sweep of American homes over the last sixty years, these are changes.

The rest seem like pretty small adjustments. I suppose I was hoping for something a little more revolutionary but I’ll have to settle for bigger laundry rooms and a few other things. The picture attached to the story of a more slanted Hawaii home that can take advantage of “Photovoltaics” looks  a lot more interesting than the rest of the story. Would Americans buy a home that looked like that just to save on energy?

Also: where do builders get their ideas about these things? From surveys and marketing they conduct or industry-wide figures and trends? What if we could ask what builders themselves would like to see change? Perhaps they simply want to go with what the public wants.

And what about those granite countertops and stainless steel appliances?

Where Americans desire McMansions the most

Amidst a story about the declining future fortunes of the McMansion, this story has a fascinating graphic based on a recent Trulia survey:

Desire for McMansions by metropolitan area

At a quick glance, it looks like people in the biggest three metro areas desire McMansions more than other places. What are the reasons for this? These are relatively wealthier areas yet they are also places where we might expect that city people would look down on McMansions. Bostonians are the most modest in their dreaming and are closer to the national averages. Does this mean people in Boston are more average in their home searches and purchases?

However, there are some caveats to these findings:

1. According to Trulia, the data is based on web searches for homes. So perhaps people in these cities simply dream bigger than people in smaller metro areas. Or there are more bigger homes in these larger metro areas?

2. Why exactly these eight cities? In particular, why don’t we have any findings from a classic Sunbelt city, like Atlanta, Dallas, Phoenix, or Houston, where people are known for having larger (and relatively cheaper compared to the big three metro areas) homes?

2a. Is there not enough search data from these places?

2b. Does Trulia not offer the same level of services/features in these Sunbelt cities?

3. Are the users of Trulia representative of metro populations? I would guess they skew toward the younger, more educated, and wealthier.

You can have an “Eco Freak McMansion”!

I’ve asked before whether one could have an acceptable green McMansion or if no McMansion could ever be considered truly green. I recently ran across this story of a man who has a 3,000 square foot “Eco Freak McMansion”:

Bill Newman’s kayak buddies love to tease him about his new house in Brooklyn Center. It’s too big for just one person, they say. It’s a McMansion. And it’s way too nice for him.

Newman just laughs. He erased his guilt about the home’s size (more than 3,000 square feet spread over three levels) by packing it with sustainable features, including solar panels, geothermal heating, super-insulated walls and rainwater collection systems…

His house, which he nicknamed the Eco Freak McMansion, is bigger, better and, yes, way nicer than what he’s used to. Even though he’s lived in his new house for several months, “I feel like I’m house-sitting for some rich guy,” he said…

The new house has three times the finished square footage as the cabin, but it’s three to four times more energy-efficient, Newman said.

It’s also a lot more stylish, thanks in part to designer and kayak buddy Jackie Kanthak, who helped him pick out finishes, fixtures and colors, aiming for locally sourced and green materials whenever possible.

Interesting. No mention of how much this all cost but it sounds like Newman no longer feels guilty about his larger than average house. It would be interesting to hear whether his friends are convinced that it really isn’t a McMansion. The house may be efficient and green but doesn’t it still have a large land footprint? Does Newman really need multiple great rooms?

If this house meets with the approval of his friends and others, could this be the wave of the future where Americans get their cake and eat it too, getting a big yet efficient house?

British architects say British homes are too small

While new American homes have gotten slightly smaller in the last few years and a number of commentators see this as a good thing, the Royal Institute of British Architects says British homes are too small:

The RIBA, which looked at 3,418 three-bedroom homes across 71 sites in England, said the squeeze is depriving thousands of families of space needed for children to do homework, for adults to relax and for guests to stay.

The findings were based on building regulations introduced in London in July which set the minimum space benchmark of 96 sq metres (1,033 sq ft) for an average three-bed home…

But research found the average floor area of new homes is 88 sq metres (947 sq ft). And the most common size is 74 sq metres (797 sq ft)…

In 2009, a report by the Government’s former design watchdog, the Commission for Architecture and the Built Environment, found new homes in Britain were the smallest in Europe.

It revealed homes in Greece and Denmark had almost twice the floor space of UK homes.

The argument here is that these “cramped houses” are “depriving households of the space they need to live comfortably and cohesively.” This is an interesting argument: the smaller house is harming residents, affecting their comfort (physical) and cohesion (social). Can there really be a case made that these homes are causing long-term harm to residents and families? If so, it is the homes themselves causing the trouble or the expectations about how much space the family should have and for whatever reason, can’t have?

Could there be some financial self-interest here on the part of these architects? Does the small average size of British homes necessarily mean that citizens openly desire bigger homes and are not getting their wish?

Are these smaller homes part of a larger effort to reduce the effects of suburbs and sprawl?

Comprehending the office and retail space in an edge city

After explaining the concept of an edge city to my American Suburbanization class, a discussion arose about how much space these places really have. When defining the edge city, Joel Garreau had these as two criteria (out of five total): “has five million square feet or more of leasable office space” and “has 600,000 square feet or more of leasable retail space.” This is a lot of space, as much as a smaller big city, but can still be hard to understand.

For example, there is much more commercial and retail space in the exemplar of the edge city: Tysons Corner, Virginia.

Around 2007 Tysons Corner had 25,599,065 square feet (2,378,231.0 m2) of office space, 1,072,874 square feet (99,673.3 m2) of industrial/flex space, 4,054,096 square feet (376,637.8 m2) of retail space, and 2,551,579 square feet (237,049.4 m2) of hotel space. Therefore Tysons Corner has a grand total of 33,278,014 square feet (3,091,628.7 m2) of commercial space.

How do we put this in more manageable terms?

1. Garreau compares this suburban space to the office and retail space in existing cities. The 5 million square feet of office space “is more than downtown Memphis.” While we may have traditionally associated this much office and retail space only with the downtowns of big cities, now concentrations of this space can be found right in the middle of the suburbs. This is unusual because suburbs are often portrayed as bedroom suburbs, places like people live and sleep but have to work elsewhere.

2. Compare this space to large buildings. The Willis (Sears) Tower in Chicago has 4.56 million square feet of space, 3.81 million rentable. So an edge city would have at least slightly more space this notable office building though perhaps it is difficult to visualize this space since it is a skyscraper and each floor seems smaller. An ever bigger building, The Pentagon, has 6.5 million square feet, more than the lower threshold for an edge city. Therefore, Tysons Corner has nearly 4 Pentagons of office space. Comparing this edge city space to shopping malls, Woodfield Mall in Schaumburg, Illinois (an edge city itself) has 2.7 million square feet while the Mall of America has a total of 4.2 million square feet.

3. We could measure edge cities in terms of square miles or acres and then compare to bigger cities. Square miles make some sense: Tysons Corner is 4.9 square miles while Memphis, a city Garreau says has downtown space similar to that of an edge city, is 302.3 square miles (on land). Acres are a little harder to interpret: a common suburban house lot is an eighth of an acre, a square mile has 640 acres (hence the dividing of the American frontier into 160 and 640 acre plots), and an acre has roughly 43,500 square feet. Then, an edge city with 5 million square feet of office space has about 115 acres of office space. Perhaps acres are best left to farmers.

In the end, I think Garreau made the right comparison to demonstrate the office and retail space within an edge city: we have some ideas about the size of downtowns of smaller big cities and the image of this amount of space existing in the suburbs is jarring.