Features and tRends

(Sept. 26, 2007)

MCMANSIONS NO MORE
Today’s Homes Downgraded in Size, Upgraded in Performance

With the recent housing slump, mortgage frenzy and deflating size of today’s “average” American family, the magnitude of today’s homes continue to become smaller and smaller. Yet these homes continue to showcase the latest in enhanced quality, functionality and technological advances. Better, not bigger, is the new mantra of contemporary homes.

What is causing this trend?
According to the U.S. Census Bureau, the median size of a newly completed single-family home reached 2,248 square feet in 2006 (up from 2,227 in 2005), yet dropped to 2,241 by the second quarter of 2007. With 2008 right around the corner, we are predicting a continuous decline due to homeowners’ lack of affordability (caused by tighter financing and fewer lending options).

In addition, because of the state of the housing market, builders are currently left with an inventory of unsold homes. Consequently, prominent homebuilders like KB Homes and Toll Brothers are recognizing shifting homeowner demand for larger homes and are respond by delivering less expensive smaller products that better suit the marketplace needs.

Factors causing new homeowner demand
The shrinking size of today’s “average” American family no longer fits the traditional Baby Boomer stereotype. Inside today’s contemporary homes, you would be more apt to find a single parent or multiple generations, than you would be likely to find two parents with two children.

Similarly, as the ages of homeowners continue to decrease, so does the size of U.S. homes. Shockingly, the National Association of Home Builders’ May 2007 Housing Facts, Figures and Trends Report shows the only age category (besides the 70+) with a homeownership rate increase between 2005 and 2006, are those that fall between the ages of 25 – 29 (growing from 40.9% in 2005 to 41.8% in 2006). Translation: the younger the homeowners, the less likely they are to cater to the space needed for spouses and children they may not have yet.

Moreover, purchaser trends such as advanced education and degrees, career advancement and a shrinking wage gap, continue to play a role in housing aimed at smaller floor plans. Today’s single women and businesswomen are growing in record numbers. In fact, single women own twice as many homes as single men. These women are juggling both careers and family life, meaning they are having children at a later age, if at all.

Quality over Quantity
While today’s homeowners are sacrificing square footage, what they’re certainly not giving up is the investment in products they can see and touch. As such, a home’s blueprint may be smaller, but is generally just as well outfitted in terms of value, technology and performance. Modern-day homeowners are choosing to incorporate custom trim and millwork, professional and commercial grade appliances, lighting systems and natural materials that reflect their need and desire for time-saving, custom and professional grade products that enhance the resale value of their homes.

Straying away from the large home on the large lot, today’s builders recognize the call for customized floor plans. And this doesn’t mean sacrificing style. Home builders are jam-packing newly-built homes with outdoor living spaces, butler pantries, walk-in closets, vanities, larger garages, sun rooms, studies, bookcases in the master suites, breakfast rooms, conservatories, bay windows…you name it. Today’s homeowners want more and more, in less and less square footage.

Although they may have a decreased lot size, today’s homes can provide the illusion of extra space, even though it’s at a premium. Many new home plans, like those developed by Kimball Hill Homes, are open and versatile, customizable for a multitude of upgrades and options such as a fifth bedroom or a guess suite that can be easily added by lowering the first-floor family room’s ceiling. In addition, other home builders like Drees Homes are showcasing angled walls or entryways, making interiors appear roomier.

Designing specialty spaces is key to enhancing the look and feel of the home, depending on the preferences of the individual homeowner. Taking the space from traditionally larger areas like the kitchen, dining room and living room, and utilizing it for specialty spaces such as game rooms, studies, sun rooms and smaller formal living rooms, is the latest trend when trying to conserve on space.

What does this mean for the housing industry?
Homebuilders, developers and remodelers need to accommodate non-traditional families, whether it’s single homebuyers, single parents, couples without children or empty-nesters. This potentially means a lower price point and most often smaller homes on smaller lots. But what it doesn’t mean is sacrificing style, quality and performance. And for my other home industry comrades - those manufacturing and selling products and services for the home – continue to market to homeowners the way they want to buy.

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