Frugality is finally showing up in new home developments.
Although the number of new single-family houses sold this year will probably be down about 68 percent from the peak of almost 1.3 million sold in 2005, there will still be about 420,000 households buying new homes this year, according to the National Association of Home Builders.
But recession-chastened house hunters are looking for different things than the boom-era buyers who snapped up homes that grew bigger, fancier and pricier by the month.
Because they aren't held back by the need to sell an old home, first-time buyers now make up a greater share of the market. They're trying to stretch their dollars at every turn, and many are concerned about the cost of heating and cooling, especially after having experienced the surge in fuel costs last summer.
Builders say buyers are judging a home in terms of how comfortable it will be as a living space for the long term, rather than as an investment they can flip for a profit after a couple of years.
Choices they are making are just starting to appear in statistics. In the July-September quarter of 2008, the average size of a house under construction fell 7.3 percent, to 2,438 square feet from 2,629 square feet in the previous quarter, said Gopal Ahluwalia, vice president for research at NAHB in a recent article. "This is the first time we have seen such a significant decline," he said.
It may be only one quarter's worth of data, but Ahluwalia has other reasons to think the drop may be more than a fluke. He surveyed builders early this month, and 90 percent reported that they were building smaller homes. Eighty-nine percent said they were building lower-priced homes.
Until recently, builders have focused mostly on grand houses loaded with upgraded counter tops, flooring, cabinets and bath fixtures. Heading into the spring, which is usually peak season for home sales, many builders are calling attention to the ways their homes save money and energy. Smaller size is one way they're lowering the cost to purchase.
Builders are also paying more attention to energy-conserving and environmentally friendly features such as efficient appliances, programmable thermostats, compact fluorescent lights and paints that emit less toxic fumes, all of which are now standard features.
The smaller homes also happen to be more efficient (and less expensive) to build. That's no small matter for builders that are struggling through the worst market of their lifetimes.
The times have definitely changed from the average buyer looking for a huge home with no lot, to smaller homes with eco friendly upgrades. Wind turbine, solar, geothermal heating and cooling systems, and recycled newspaper insulation are upgrades while granite counter tops and push button gas fireplaces are becoming standard.
Change is all around us. Go with the flow. Sell what the client wants.
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