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Smaller, Cheaper, More Flexible — And Other Ways New Homes Are Changing With The Economy

What hasn’t killed new homes is making many of them better.

Money troubles, difficulty getting financing and competition from overabundant, cheap existing homes keeps forcing many smaller home builders out of business. But the pressure to make distinctive, cost-competitive products is inspiring builders to make fundamental changes, many of them improvements.

1. Energy efficient homes
For the same reasons buyers like fuel-efficient vehicles, they’re drawn to highly energy-efficient homes. The lower operating costs are reassuring to people who are putting every penny into a purchase and must contain their ongoing expenses.

A new energy-efficient, weather-tight structure is one of the strongest arguments for new construction. With rising fuel costs, buyers see efficiency as a “must”.

Smaller builders in every state have led the way toward this trend using strategic design, efficient windows, super insulation and sophisticated heating and air-conditioning systems. Green, efficient homes have become indistinguishable from other homes and have none of the perceived sacrifices. Solar panels are nice but not necessary on an extremely efficient home.

Many larger builders are also stressing the energy efficiency of their homes in advertising and marketing geared toward the budget minded home buyer.

2. Greener
When the National Association of Home Builders surveyed members last year, 68% predicted homes were going “greener,” with low-emissivity windows, engineered wood components, water-efficient dual-flush toilets, low-flow faucets and other water-conserving features.

Home-products manufacturers are making it easier, with counters, wall coverings, tile, hardwood flooring and paint with recycled content and reduced or eliminated off-gassing.

Even the appraisal industry is on board, training appraisers to give extra credit for some green features when establishing the value of a home.

3. Affordable
The median price of a new home has dropped n nationwide from $247,900 in 2007 to $210,300 this past December, according to the NAHB.

New-home sales in 2005 totaled 1.28 million, but that number dropped to 776,000 in 2007 and 322,000 by 2010. In 2011, they hit a record-low 302,000.

Builders responded by bringing down home prices and sizes. They are competing with an oversupply of existing homes, and costs for materials such as lumber and copper are rising, but they’ve enjoyed one area of savings: Falling land prices are keeping new homes affordable.

For 35 years, the American home grew larger. In 1973, when the Census Bureau started keeping track, the median house was 1,525 square feet. Homes swelled to 2,277 square feet by 2007 and then began to shrink. By 2010, the median single-family home was 2,169 square feet.

The downsizing may have stopped. The American Institute of Architects’ Home Design Trends Survey shows signs that home size is stabilizing. Census figures from the third quarter of 2011 show the median new home at 2,242 square feet, a bump up.

In the boom, buyers based home purchases on the expectation of big profits at resale. Demand grew for everything oversized and lavish, whether the features would be useful to the current buyers or not.

Today, the math is quite different. Quick profits from resale are out of the equation. That puts emphasis on design and on features that buyers will enjoy now.

The cheapest structure to build is a simple box. Accordingly, new designs are simple. Builders are analyzing their designs and processes to cut costs. Shrewd designers work with off-the-shelf material sizes and minimize labor-intensive measuring, cutting and nailing and material waste.

Halls are narrower. Voluminous interior spaces are gone. What’s left in a new home is what’s essential.

Look for trends in the years to come such as:

  •     Construction economies. Fewer niches, nooks, window seats and protruding fireplace areas. Bathrooms will be stacked atop each other to minimize long runs of plumbing. Roof lines will be simpler, with fewer gables, because complex roofs require numerous expensive trusses.
  •     More standardization, less variety. You may find just three or four window sizes in a home, for example, to let the builder save on bulk purchases on a smaller variety of materials.
  •     Fewer rooms. Prepare to see fewer mudrooms, three-car garages and three-bathroom and four-bedroom homes. Home theaters, pet rooms, safe rooms, greenhouses, exercise rooms and wings for children or guests are out. Even living rooms, dining rooms, sunrooms and hobby rooms are being jettisoned.
  •     Pared-back features. Builders are adding cheaper pantries and scaling back on expensive kitchen cabinets. They’re replacing basements with slabs and building straight runs of stairs with no turns or landings. Luxury whirlpool tubs, once standard in master bathrooms, are on the way out. Instead, builders are expanding master-bath showers.
  •     Options. Features such as fireplaces, high-end appliances and master whirlpool baths, once standard, are increasingly relegated to a menu of optional upgrades, available at extra cost.

Recent improvements in components, furnishings and durable, low-maintenance materials have increased quality of life so that small doesn’t necessarily mean compromised. The home can be 10% smaller than it used to be but have better lighting, better flooring, better circulation, better acoustics, better siding — it’s a better home.

6. Flexible
With specialty rooms disappearing and a home’s footprint shrinking, the trend is toward flexible spaces that can be deployed as a family requires.

In small, first-time homes, you may not see any formal space. If it’s a trade-up house of any kind, there may still be one formal space, but people need to select between a formal dining room and formal living room.

New great rooms combining kitchen-dining-living functions are the heart of smaller homes. Big homes dispersed family members to far-away rooms. The great room gathers them while letting each concentrate on something different — homework, meal preparation, eating, socializing, playing, entertaining, relaxing and even working.

To accommodate this activity, kitchens are growing. A brand-new kitchen is another clear advantage of new construction, so builders are playing it up, lavishing budget share on bigger islands, better appliances, great lighting and lots of attractive flooring, cabinet, counter and finish choices.

7. Filled with storage
Builders are listening to buyers who have been asking for more storage for years. With fewer rooms, more storage is a big selling point.

One feature that hasn’t been stripped out of many new homes is the walk-in closet in the master bedroom.

Also, new homes often have utility rooms off the garage and second-story laundries filled with cupboards, closets and shelves.

 

 

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