Recession Could Bring Big Change in What Consumers Demand in New Homes

By Elizabeth Razzi
Sunday, December 28, 2008

What will new homes look like after this recession, which has brought construction nearly to a halt? Consumers who have learned the bitter lessons about declining home values, burdensome debts and ephemeral retirement savings values may well demand different houses than the ones that dot our recently built neighborhoods.

History hints that this downturn could change our tastes. Homes built in the 1940s and '50s, for example, were usually smaller and simpler than large, frilly Victorians that had been in style before the Great Depression and World War II. Materials remained scarce for years after the war, and returning veterans, boosted by mortgage assistance provided under the GI Bill of Rights of 1944, bought Levittowns full of simple new houses as quickly as they could be made.

I asked Virginia McAlester, author of the classic (and soon to be updated) book, "A Field Guide to American Houses," to speculate on what type of new homes we may see after this recession. She expects smaller ones, built closer together, but with more attention to their positioning on the lot to better preserve privacy and the occupants' access to a little spot of nature.

She pointed out that at the turn of the last century, the wealthy lived in elaborate houses with 20 to even 40 rooms, which required a tremendous income just to keep them going. "You just had such overbuilding of size," she said. "Now you have a lot of cul-de-sacs of great big, overbuilt houses way outside the city," she said.

Already we've started to see new homes being simplified compared with those built during the go-go years. Some sprawling new houses needed a dozen or more roof gables to cover all the floor plan's nooks and crannies, McAlester said.

"You're losing that two-story entry that was such a feature of McMansions. It may be replaced with a tower, but for 15 years you had to have it," she said.

"We are going to have far more small houses and attached houses," she predicted. The cost of building the roads, sewers and utility lines to serve compact neighborhoods is lower. And soundproofing will become more important to buyers when they're living closer to their neighbors -- and possibly closer to retail and commercial properties.

"People will put a whole lot more into what it requires to have it be comfortable to live in," she said.

Tomorrow's buyers may be more conscious of the amount of income -- and the work required to produce that income -- associated with maintaining a large-house lifestyle.

"When you see people who have a whole room for a closet, or two-room closets, I mean, that reflects an incredible amount of discretionary income and wealth," she said. "If you have half as much discretionary wealth, that would probably translate to half as many clothes and cars."

If owners find them unsustainable, some large suburban houses might get turned into multi-family homes, just as many of the large homes of the late 1880s and early 1900s were converted into duplexes once lifestyles grew more spare.

"There is actually a pattern of building out there that is called manor houses," she said. From the front, they look like traditional houses, with a single entry. But the structure may incorporate two to five homes within, with separate entries tucked away on the sides of the building. "It's been found to be a way of putting affordable housing into an area," McAlester said.

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