Builders take a chance on smaller houses
BUILDERS ARE TAKING A CHANCE ON SMALLER FLOOR PLANS, SIMPLER DESIGNS
After a decade, some courageous builders are venturing back into building new homes in the hopes of selling them.
You now can see a new home (or a cluster) going up with “for sale” signs out front, amid all the other “for sale” signs in the neighborhood.
Why?
It may be good to think back. Remember the “good old days” of home building, when whole streets were made and houses mushroomed up? Homes became a magic investment where your mortgage debt leveraged even greater net worth, as home prices spiraled up, like the homes. Homes were bigger, festooned with tack-on features of columns, dormers, “media rooms” — it was conspicuous consumption.
It was also unsustainable to build at a rate of 3 million homes a year in America. Now we build 800,000. Building permits in Connecticut peaked at 11,000 in 2005, and have bounced around 5,000 for the last decade.
“Spec building” single-family
homes, building a house based on the speculation of sales, simply vanished from most of New England after 2008.
Despite the spec bubble bursting, some building kept happening. Individuals renovated or built homes, a CVS or Rite Aid pharmacy spontaneously popped up on prominent corners like weeds and new apartments appeared up in New Haven and Stamford.
There were so many unfinished homes after the boom’s bust that Connecticut passed a statute in 2011 that allowed unfinished homes to be taxed, further depressing a depressed market.
Most “new” homes for sale in Connecticut are still a decade old or older, and take a long tome to sell, and often have to reduce their original price.
In a glut of caused by the slow pace of selling “old” homes, “new” homes may just provide a successful marketing edge. Homes of any age are just an assemblage of systems. While a home’s structure should remain unchanged, virtually all the other parts of a home age to a point of repair, and ultimately to a point of replacement. So buying “new” reduces annual costs of home ownership until the repair or maintenance costs kick in a decade or so into owning the home. In a buyer’s market, showing that your “new” home will not only save year after year on repair costs, but “new” homes have few, if any, emotional black holes of dealing with domestic repair nightmares of leaky roofs, leaky pipes and aging cabinetry that serially fail in endless time dumps.
Even with those advantages, when there is a glut, cost is king. What increases costs in home construction? First, size — so this new generation of homes seems to be tightly sized around 3,000 square feet. Second, complexity is costly, so these new homes are fairly simple. Third, idiosyncrasy is pricey, so forget about an architect, even a designer, so stock plans are used, tweaked in specifics.
The official voice of home building in Connecticut agrees with me. “In place of big spec homes, we are seeing builders offer more value with smaller in town spec homes,” said Chris Nelson, the president of Home Builders and Remodelers of Connecticut.
Those builders are minimizing risk by offering what has sold. The homes being built on spec today remind me of those offered before the Boomers hit the housing market 50 years ago. These new homes could be called “traditional “or “colonial” with blandly toned or white-stock siding, faux divided-lite windows, stock trim and surfaces, and employ the simplest of street facing siting orientations.
These homes have no “open plan, “solar” or “tiny house” ethic, despite the popular appeal of these trends in the media. Of course, there is openness inside that opens to a rear yard, maybe a deck/terrace or even a screen porch. There is typically a well turned out kitchen, some stone countertops, maybe even a fireplace. But there is no innovation, reinvention or the risk of insight into any future than what is already in the history of all those other single family might be.
Finding a safe place of familiarity is what all spec homes have ever been about. Innovation is not led in mass production, and is seldom targeted by the profit motive. Money is what makes spec building risky and profitable. If spending money makes more money, it will be spent. If not, these homes retreat to the default settings of what sells.
When McMansions were being marketed as being “green” because they had efficient heating plants or those “plantation grown” bamboo floors (shipped from God knows where). I knew the homes’ 5,000 square feet wasted more carbon in materials and in heating and cooling its huge volumes of air than any sales brochure could make defendable. But those big, decorated, boxes sold. Until they didn’t.
That is the rollercoaster of spec building, which may have just started up the housing markets amusement park in the last year. Will that ride go up in rewarding speculation or free fall into failure? Watch those “for sale” signs.