Seeking a Smaller Footprint

By Elizabeth Razzi
Special to The Washington Post
Saturday, January 24, 2009

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. "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 larded with upgraded countertops, 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 trimming the cost.

For example, Atlanta-based Beazer Homes recently started to shrink its designs. Diana Van Stone, vice president of sales and marketing, said their high-end houses, which used to be about 3,600 to 3,700 square feet, now average about 3,000 square feet.

"On the higher end, we've whittled away at that quite a bit," she said.

Entry-level homes, at least in some locations, are getting a trim as well. Some of Beazer's houses in the Greenfield development in Hagerstown are now about 1,900 square feet, compared with the old standard of 2,500 square feet.

The Hagerstown area is a particularly price-sensitive market, Van Stone noted. Beazer's detached houses there start at about $260,000. Smaller, less-expensive houses may not be on their way to more expensive markets closer to the District, however. "A lot depends on the requirements the county may have set when they approved the community," Van Stone said.

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