6 minute read
Size Matters
Size Matters
The changing face of new homes: Bigger, adjustable houses on the way
BY LEW SICHELMAN | CONTRIBUTING WRITER, NATIONAL MORTGAGE PROFESSIONAL
Mortgage originators should get ready: a trend in new home construction that favors first-time buyers is about to end.
For the last four years, the size of new single-family houses has been trending downward as builders added entry-level houses to their model home mix to boost supply to an inventory-starved market.
But the National Association of Home Builders says its members probably will reverse course as buyers seek more space as a result of the pandemic.
Actually, there already are signs of the shift. In this year’s first quarter, the Census Bureau found that median single-family floor area ticked up to 2,291 square feet from 2,252 in last year’s fourth quarter.
A small gain, to be sure. But while a June survey by John Burns Real Estate Consulting of 5,000 recent buyers found that more than two-thirds cited COVID-19 as the reason they moved, many also did because they disliked the layout of their previous homes and wanted more space.
SF SQUARED
But even before the pandemic struck, the size of a house was important, according to a poll of nearly 1,800 people in late February and early March by Michigan-based builder Lombardo Homes. Price was paramount, of course, but size was more important than layout, schools or even property taxes.
Buyers are likely to find houses with more space in the suburbs, exurbs and distant outposts. In this instance, though, while the virus has accelerated the flow outward, the shift away from cities is driven largely by demographics and has been underway for last two-plus years.
Todd LaRue of the RCLCO real estate advisory firm points out that the highest percentage ever of millennial households with children still at home are now passing through their prime home buying ages of 34 to 44 years. And for the most part, they are moving away from urban locations to take advantage of low loan costs to buy a first house or move up to a newer place.
The shift, Tim Sullivan of Meyers Research agrees, will be good for secondary and tertiary markets where the cost-of-living is less.
WHERE SMALL IS GOOD
Already, the NAHB is seeing construction expanding at a more rapid rate in smaller cities and rural areas. Before the pandemic hit full throttle in March, the builder group found activity increasing at a higher rate in inner and outer suburbs than in high-density places. And while the pace of construction was increasing everywhere prior to the lockdown, the outlying suburbs registered the strong growth.
What is the extra space likely to look like? With the movement to work from home, count on more square footage for a home office, whether it be a room dedicated as such or an extra bedroom that can easily be converted.
“For years, people were scared of working from home,” said one Urban Land Institute member during a recent digital happy hour. “Now they are seeing it can and does work.”
The same goes for employers, who have since discovered their workers can be just as productive working from home, if not more so. More and more companies are joining the likes of Twitter, American Express and Morgan Stanley, all of which have told their employees they can work from home, either through the end of the year or forever. “Some companies,” offers Sullivan of Meyers Research, “may never go back to office space.”
NAHB studies show many buyers always wanted a home office. In its last survey, in 2018, 65% said it was a key feature on their shopping lists, and the builder group says that percentage is likely to grow.
And that’s another trend allowing people to live in places where the cost of living is less, the air is cleaner and nature is right outside their front doors.
Another strong possibility: An in-house gym, or maybe a at least a dead-end hallway that has been dubbed the “Peleton room” where an exercise bike can be parked. Fitness rooms will be important “for work, school and play,” Meyers’ Molly Carmichael offers.
SPACE FORCE
Of course, there’s “only a finite amount of space” with which builders can work before the cost of their products becomes prohibitive, Dan DiClerico of HomeAdvisor points out. Consequently, he and others believe there will be a major “redistribution of space” in newer models.
Open floor plans are likely to bite the dust. In their place will be more defined rooms, some designated as multi-purpose. A spare bedroom, for example, could be shown with a murphy bed that can be pushed up into the wall so kids can use the space as a play room, Dad can use it as a home office and Mom can use it for exercise or a hobby.
Younger buyers, in particular, “displayed a clear preference for flexible spaces in their next home” in the latest national survey by Atlantabased home builder Ashton Woods.
“Instead of rooms dedicated to just one purpose, home buyers now want a living, breathing floor plan that can flex as their lives change,” says Jay Kallos, the firm’s senior vice president for architecture. “They want it to adapt easily for when they’re newlyweds, starting a family, becoming empty nesters and even inviting family back into the home later in life with aging parents or boomerang kids.”
“Houses need more flex space,” agrees Sullivan, who says “builders can learn a lot from how RVs and sailboats use flex space.”
Spacious kitchens going forward could be less so. “Fewer people are going to want the great big open rooms that include the kitchen, with more now wanting the kitchen to return to having some separation to hide the smells, mess and noise,” suggests Bill Ramsey of the Denver architectural firm, KTGY.
Kitchens will be more hygienic, too, says DiClerico, with low maintenance, solid surface, non-porous countertops that resist germs and can be wiped clean. “Housing is one of the few things that can be made contactless,” agrees Ali Wolf, chief economist at Meyers Research. “They can be easily sterilized.”
Big master bathrooms also could become smaller, with rimless wallmounted toilets. Already popular in Europe, these fixtures are easier to clean, inside, outside and particularly underneath. “Buyers want their experience to be a frictionless as possible,” DeClerico says.
TINKERING IN THE GARAGE
Space may also be found in the garage. Even though most people don’t park their vehicles in their garages, two-car pads are the norm nowadays. Nearly two out of three new houses sold in 2019 had two-car garages, and 19% had three bays or more.
But how about a one-car garage that can hold two cars, one on the pad and the other on a lift above? Hey, the extra space has to come from somewhere. And if people are working from home, they may need one less car anyway.
Finally, Lloyd Alter, an adjunct professor at Ryerson University in Toronto, thinks builders who be wise to adopt some of the teachings of noted Swiss architect La Corbusier, a pioneer of modern architecture in the 20th century,
One idea was to place a sink just inside the front door where people could wash their hands before entering. How about a larger entry that acts more like a laundry room where you could not only wash your hands but also remove your clothing and throw it into the washing machine? Or cuspidors instead of sinks where you could spit out toothpaste and mouthwash?
These options may sound farfetched now. But in a time when most people are concerned about a spreading killer virus, Alter believes they are “incredibly sensible.”
Lew Sichelman is a contributing writer to National Mortgage Professional magazine. He has been covering the housing and mortgage sectors for 52 years. His syndicated column appears in major newspapers throughout the country. He also has been the real estate editor at two major Washington, D.C., dailies and spent 30 years on the staff of National Mortgage News, formerly National Thrift News.