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Recession Should Change Tastes

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.

Certainly that would provoke NIMBY wars and would probably require changes to some local zoning laws, but breaking up homes into many units could be a way to preserve values if there aren't enough people willing to bear the burden of big-house upkeep by themselves.

However, Ed Hudson, director of market research for the National Association of Home Builders Research Center in Upper Marlboro, isn't convinced that tomorrow's home buyers will really go for less space. What he does see, already, is a noticeable push from buyers to get more quality for their money.

"The McMansion going by the wayside? Well, maybe a little, but the average size is increasing," Hudson said.

Surveys of buyers during this recession show that they want upgrades that signify lasting value. When buyers chose among free upgrades being offered by builders, their top choice was upgraded kitchen appliances, followed by granite countertops and then upgraded wood flooring.

Other features that tomorrow's value-minded buyer is probably going to go for include upgraded front doors made of wood or fiberglass (and stained to look like wood), replacing painted steel doors. The new doors will more likely have windows built in or running vertically beside the door frame.

"People are more into solid wood cabinets," Hudson said. Solid-wood boxes are sturdier than cheaper-grade cabinets framed with plywood or particle board.

Money spent building new houses will be put where buyers can see it--in stone or brick facades, for example. But, already, builders are cutting back on spending where it doesn't show. For example, as copper prices were soaring in recent years, builders shifted dramatically to water pipes made of PEX, a plastic. "PEX is now the most common water distribution piping in U.S. [new] homes," said Hudson. "It's pretty startling how rapidly it changed."

Hudson and McAlester agreed that energy efficiency is going to be a lasting concern of buyers after they return to the market.

"Homes will be built in a greener and greener manner to reduce long-term utility costs," McAlester said. "Cathedral ceilings are pretty expensive, at least in cold climates."

Hudson expects homes to have more energy-monitoring systems to help people track their use. There will also be more solar-powered systems to provide electricity and hot water.

In particular, he expects more use of geothermal heat pumps, which take advantage of the fact that a few feet below the surface, the ground maintains a stable temperature between 50 and 60 degrees throughout the year. These heat exchangers use that steady temperature to heat and cool air inside the home. The equipment can cost several times more than an air-to-air heat pump, according to the U.S. Department of Energy, but greater efficiency can mean a payback in cheaper energy bills within five to 10 years.

"People are a lot more somber in mood and a lot less exuberant about continuing growth in wealth," Hudson said.

It will be fascinating to see how our new neighborhoods change as a result.

This week's column marks the end of the Local Address feature. Elizabeth Razzi will continue to write about real estate and personal finance for the Post, and she will continue to welcome your comments and suggestions at Razzie@washpost.com.

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