I thought this was amusing…
From D.R. Horton: Smaller is better in some markets, May 5th:
D.R. Horton’s chief executive says smaller, more affordable homes are selling well in some areas and will bring higher profits to the nation’s largest home builder.
CEO Donald Tomnitz said the smaller homes were particularly popular in Seattle and Portland, Ore. Smaller homes are cheaper to build and attract first-time buyers because they are priced competitively with foreclosures.
From Weyerhaeuser CEO: Housing excess ‘made up for’, April 21st:
Weyerhaeuser CEO Dan Fulton (Weyerhaeuser owns Quadrant Homes) – “We see some signals that average home size is declining. That to me makes sense. It’s simpler. It’s smaller, and that’s bringing that home price back down to the point where your average prospective homeowner with the median income can buy a new home.”
Meanwhile, on 196th Street in Lynnwood:
Hmm…
EconE » May 10, 2009 at 1:11 pm
…or a giant jacked up 4×4.
Napolean Complex?
Scotsman » May 10, 2009 at 1:35 pm
“Smaller homes are cheaper to build and attract first-time buyers because they are priced competitively ”
Duh. A brilliant new marketing strategy is born.
Ray Pepper » May 10, 2009 at 6:29 pm
I love Quadrant. Sell a home and get a FREE Space Needle Dinner in January. If I sell 4 I get a 10k bonus. They used to pay that. Not sure anymore. I have 1 Quadrant pending. 3 more and I will take all you BUBBLE HEADS to dinner at Dick’s in Seattle. All you can eat! I promise!
WaileaKid » May 10, 2009 at 8:02 pm
Seattle builders, at least on eastside haven’t yet figured out that small will sell better here. They are still busy building largest possible houses on the smallest possible lots to maximize profits and create an illusion of cheaper prices by bringing down $/sqft number. Eastside is littered with such new constructions by some of the very reputed builders.
Angie » May 10, 2009 at 9:09 pm
Well! Small housing units are coming soon to Columbia City! A couple of weeks ago a local homebuilding company demolished a pair of triplexes on a 10K SF lot, apparently in order to start building…turns out it’s a 12 pack of townhouses.
I can’t imagine how they’re going to fit that many units on that lot. I’m sure they will be miniscule.
Nor can I imagine who the heck will buy them…the 9 pack of townhouses (also on a 10K SF lot) two doors down has sold not a single unit.
I must confess that I actually used the word “ballsy” when talking to the builder about getting this project underway in this economic environment. I made him promise me he wasn’t going to quit in the middle and leave a half-finished monstrosity on the lot. He did promise, but I’ll believe it when I see it–finished…
b » May 10, 2009 at 10:02 pm
Angie -
How else are we going to have more section 8 housing in three years?
Scotsman » May 10, 2009 at 10:50 pm
RE: Angie @ 5 –
My last home on the east side was sold to a builder who tore it down to build three McMansions. As we parted for the last time (Aug 2007) I told him it was hard for me to understand who would want to pay $1.2M+ for a home with no view and no yard in an area of existing homes, many of which had larger yards and views, and could be purchased for much less. Today there is one partially completed home on the property, work has stopped, and there is no way it will sell for anything close to the original asking price. Before becoming a builder and “loving real estate,” the guy was a fisherman.
It’s sad, I hear the fishing is going well this year.
Good luck with yours.
EconE » May 10, 2009 at 11:53 pm
RE: Scotsman @ 7 –
I’ve never understood the infatuation people have with McMansions. They are completely out of proportion to the lots they are on and are just obnoxious, overbearing, chest thumping cheap pieces of sh#t. Then again…pretty much everything in our society comes in three sizes…Big, Bigger and Biggest.
I guess I prefer quality over quantity.
isotope66 » May 10, 2009 at 11:57 pm
RE: Scotsman @ 7 – A set of 1.3M (original asking price) new construction homes in my neighborhood ( Redmond – W Lk Sammamish ) have been on the market for more than a year. No lake view or yard. The lots next to these were being prepared for more such homes but all of a sudden work stopped. These homes are now down to 900k and still on the market.
EconE » May 11, 2009 at 12:07 am
Jeeez….takes me 2 minutes to find a perfect example.
http://www.redfin.com/WA/Seattle/821-34th-Ave-E-98112/home/139716
Make sure you look at the “streetview” so you can see the beautiful 1929 brick tudor that the builder decided to scrape in order to bring “whoever” this awful monstrocity. Or just look here…
http://www.zillow.com/homedetails/photos/49116919_zpid/
Nice freakin’ columns…what is it? The parthenon?
And in Madison Park of all places.
All I have to say to whoever issued that permit is….”you done fu##ed up”…that would NEVER fly in my old hood in Los Angeles.
Scotsman » May 11, 2009 at 12:31 am
RE: EconE @ 10 –
That is sad- the existing house was pretty sweet. I’m not sure who these homes are for- no yard for kids, no “friendly face” to the neighborhood, everything takes place on the inside.
One of the joys of moving from Bellevue to the “country” out by Fall City is that although everyone has acreage and the homes are far apart, I know ALL of my neighbors here for 3-4 house or more in all directions. And nobody gives a second thought to walking over to say “hi” when they see you out in the yard, or are walking down the street. The way it should be.
In thinking about the next home, smaller and very high quality with an emphasis on site specific design are at the top of the list. I’ve walked into enough Buchan homes, etc. and they are nice, but cold and not really distinct in any memorable way. There are still lots of talented people out there who can design for specific sites and needs. The reality is we live in a small portion of our current home, with a family that shrinking, not growing. And I’m never going to impress anyone I care about with a MacMansion.
Cheap South » May 11, 2009 at 4:53 am
RE: EconE @ 8 –
And what about the electric/gas bill?? For some people, $200-$300 energy monthly bills are “normal”.
Kary L. Krismer » May 11, 2009 at 7:01 am
The desire for more square footage is what’s gotten us to the box style of house. A cube has the most square footage..
Racket » May 11, 2009 at 7:08 am
By EconE @ 10:
On that street the McMansion looks more in place than the little Tudor house.
There is really not much left under 3000SQFT in that neighborhood.
“That is sad- the existing house was pretty sweet. I’m not sure who these homes are for- no yard for kids, no “friendly face” to the neighborhood, everything takes place on the inside.”
This is Seattle, most people spend their time inside most of the year.
Racket » May 11, 2009 at 7:10 am
RE: Cheap South @ 12 –
For most people 2-300 a month is normal. I am in a 1800sqft house, and I easily pay that.
If I move up to a newer larger house with a more efficient heating system, I’d probably pay the same.
One Eyed Man » May 11, 2009 at 7:55 am
RE: WaileaKid @ 4 –
The failure of high end production builders to move to smaller, lower priced homes, is IMO at least in part a function of being poorly positioned to make a change with the market. If you change the character of a plat which is partly built out by putting in lower priced homes you’re risking your reputation with the prior purchasers who may feel betrayed. Running a mid to large homebuilder is a little like steering an oceanliner. You sometimes have to commit to things a long way in advance. But I know of one high end east side builder who in the last 6 months has closed out three plats that were million dollar plus homes and has started 2 new plats that are both hitting the 600K price point. That may be the new price point for mid to large size local builders in the formerly high end who what a sustainable business.
That particular builder aggressively brought prices down to current market levels and was willing to negotiate reasonably at the market’s new price points rather than pulling that old I’m offended by your low offer BS. It probably helps that they didn’t get over leveraged and didn’t have to meet lender required release prices to sell houses. You can change your price mix more easily if you have some smaller plats that you can sell out reasonably quickly but it’s tough if you have 30 or 40 lots in a plat where the absorption rate is only 8 to 10 houses a year in the boom years and you still have 20 lots left. Some of it’s probably luck but it’s impressive from a business standpoint to see an entity positioned to maneuver in the market place and then actually do it.
Just for a little historic perspective on boom bust cycles. In 1990, a builder the firm I was in represented in Orange County Ca had 400 pre-sales in escrow. That builder had gone into business only several years earlier. Two years later the builder was completely out of business, to their credit, without going bankrupt. That’s from nothing to larger than Quadrant to nothing again in less than 6 years. Better to be building smaller houses than no houses at all.
I also took a look again at the CS numbers for LA in the 1990 to 2000 period. The market there went down over 25% from the highs and took about 10 years to return to the previous highs. It wasn’t as drastic as the current cycle but it was still pretty amazing. But perhaps even more amazing is how quickly they forget.
Hector » May 11, 2009 at 8:43 am
Smaller houses is just the means, the end being they want to shrink lots even more, allowing them to squeeze in even more houses. Thanks Lynnwood, Everett, Covington, Maple Valley, Kent, etc for continuing to allow this.
patient » May 11, 2009 at 9:44 am
The builders obviously either don’t get it or more likely wants to keep pushing the same POS sqft / $. So their $800k POSs built for $300K doesn’t sell? Hmmmm…instead of moving the price to suite the quaility/value lets instead change the size so we can sell a $50k POS for $350k. Sounds like a good business plan but will people really buy into it?
Racket » May 11, 2009 at 9:48 am
No, thank the GMA for that. Most of those cities didn’t want that type of growth.
NoMoreWork » May 11, 2009 at 11:00 am
Does anybody else find the tagline “More House. Less Money.” casually hilarious? As in when you buy a Quadrant home you end up with more house and less money… I think I’ll pass.
asdlfkj » May 11, 2009 at 11:14 am
RE: EconE @ 10 –
WOW.. Who would EVER do that. This is a shame!
Hector » May 11, 2009 at 1:25 pm
GMA didn’t force them to approve <5 SF lots, the cities let the builders run the show. Builders are all about maximizing, and if they can scale it to charge more per SF in the name of ‘green’ or ‘ease of maintennace’, they will. If they can squeeze 4 houses where two should be by creating wonkey alley’s where corners should be, they will.
Appreciate the thread Tim, but just like anyone who sells a product, especially one as customizable as a house, they will adapt their message to their audience.
tomtom » May 11, 2009 at 1:46 pm
By NoMoreWork @ 20:
They can shorten their slogan to “House Poor.”
Scotsman » May 11, 2009 at 2:23 pm
One of my favorites is Ross Chapin, although his stuff is not cheap to build. Small can be quite livable.
http://www.rosschapin.com/Plans/plans.html
EconE » May 11, 2009 at 3:32 pm
By Racket @ 14:
Hardly…on all counts.
That POS is 5500 sf on a 7500 sf lot. Not many other houses surrounding it have such a lopsided ratio.
Look at the comps all over Seattle available in that price range…that thing doesn’t hold a candle to them.
Maybe it’s just my misguided perception, but I would assume that a person with that kind of money to spend would prefer a real mansion such as this one…
http://www.redfin.com/WA/Seattle/1660-Broadmoor-Dr-E-98112/home/138890
One Eyed Man » May 11, 2009 at 4:22 pm
RE: Hector @ 22 –
I certainly agree with you that builders commonly want to increase density. But I’m not sure that you understand how the GMA works. Its my recollection that the GMA instituted the urban growth boundary and provided for changes in the comprehensive plans and zoning codes inside the urban growth boundary and incorporated areas to allow for increased density. A basic principle of the GMA is to preserve open space outside the urban growth boundary by containing growth to the area inside the urban growth boundary at increased densities, The GMA provided for changing the minimum lot zoning outside the urban growth boundary to 5 acre minimum. It stopped most subdivision in unicorporated areas outside the urban growth boundry unless it was done as a huge planned development like Snoqualmie Ridge or Issaquah Highlands or with density credits by setting aside open space. I’ve been telling people for 20 years that the simplest summary of the GMA was that we want to be Manhattan, not LA. I’m pretty sure I’m right. If I’m wrong, let me know. But be gentle because it would be very disconcerting for me to discover once again that I’ve become entirely detached from reality for such a long period of time.;-)
Racket » May 11, 2009 at 5:04 pm
RE: EconE @ 25 –
I wasn’t commenting on the price, but the size of the house and lot.
You couldn’t pay me enough to live in Broadmoor, and especially not on the golf course.
My brother lives in a 3200SQFT MF house in redmond ridge, and with all the parks they have there, you really dont miss a yard you have to mow and maintain. The parks also have some bad ass play systems.
EconE » May 11, 2009 at 5:32 pm
RE: Racket @ 27 –
My comments were primarily based on size also.
It’s not proportioned correctly with the lot. The larger homes in the neighborhood appear to be on larger lots for the most part.
It’s still a McMansion….it has nothing to do with energy efficiency or other forms of political correctness. It’s about architectural integrity.
The “Mc” should be relatively easy to understand….it’s like eating a burger at XXX (Issaquah) or Redmill (Phinney Ridge) vs. McDonalds.
McDonalds has “bad ass play systems” too. ;^)
Racket » May 11, 2009 at 5:45 pm
I personally view McMansions as the large stucco pieces of crap track mansions that litter most of the East side.
The are a lot of tight lots in that neighborhood, I know it very well. There are many huge houses 10′ apart.
I really don’t think either of those places have good burgers, but anything is better than Mc d’s.
db » May 11, 2009 at 5:50 pm
RE: EconE @ 10 –
That is a crying shame. They could have remodelled the existing house and it would have been much better. I *hate* columns. There as tacky as the lady and water jug fountains in the front yard. The whole faux-Italian look, Yeeuch.
MacAttack » May 11, 2009 at 6:33 pm
Wow, is that like a two-year-old billboard that got uncovered by accident? That’s SO 2005!
Hector » May 11, 2009 at 10:27 pm
RE: One Eyed Man @ 26 –
I’m admittedly not an expert either One Eyed, but yes, it’s my understanding that one major goal was to center the growth on urban areas as opposed to encouraging sprawl.
That being said, I don’t think it states that the rural burbs will be forced to allow miniscule lots. The point I’m really trying to make is that the builders took the driving seat in many of these communities because local government didn’t want to take the time to fully understand the GMA and didn’t want to manage it’s implementation (like so many other programs unfortunately…). In giving up this control, these communities ultimately did a huge disservice to themselves in all the devaluations of their community. Who wants a single stirp of grass for a back yard?
Back yards are supposed to be yards, not 3 foot long strips of grass. What is the point in building a neighborhood or home that is obviously intended for families, but the kids are forced to play catch in the street?
Sorry, huge soapbox for me, and blaming it all on GMA doesn’t begin to address the scope of the blame.
David Losh » May 11, 2009 at 11:49 pm
RE: One Eyed Man @ 26 – RE: Hector @ 32 –
Out by Dunn Lumber on 185th ? there is a concept project of cottage homes around an open space. It was used in multiple presentations of what in city housing should look like. We eneded up with town homes, as they said it was a San Fransisco style.
Once the style was set cities rubber stamped the plans and yes I think they were looking for quick tax dollars and permitting fees.
There were all kinds of custom plans proposed that city planners didn’t understand. They got used to looking at one thing and that was that.
Somehting new got sent back for revision, time, and time, again. Building Plans are so common that you can buy them retail from Architects Northwest. No thinking involved and city planners have the rubber stamp ready.
Communities did most of the damage with in fighting about parks and trade offs for sidewalks that went nowhere.
Yes there was supposed to be planning, yes cities were supposed to be involved, but politicians just want to get elected and stay in office. City Planners just want to be included in next years budget.
Hector » May 12, 2009 at 9:48 am
Great post David.
Racket » May 12, 2009 at 10:00 am
“Who wants a single stirp of grass for a back yard? ”
Me, but I’d probably replace it with field turf.
There is a huge demand for houses with easy- to- maintain lots, because many of us do not have time to maintain them.
I was looking at a 3,000Sqft house with 4 swipes of a lawnmower in the back, and it was PERFECT!!.
biliruben » May 12, 2009 at 10:13 am
I was chatting up my old neighbor while moving one of my last possessions (BBQ) out. She was lamenting her still being in Seattle instead of down in Cali with her husband.
They are trying to lease their McCraftsman they bought new in 2007, but she can’t leave until she does. These massive houses sit 3-across, shoulder-to-shoulder, on what was two smaller lots with 40’s ramblers a couple years ago. She claimed she had cut the rent a massive amount, but still no takers. Out of curiosity, I went to see what this massive discount added up to. $4000/mo. No idea what it was before. Granted, they paid $1.3 million, so their mortgage can’t be pretty, but I can’t think of a whole lot of people looking for a 4K rental.
The interesting thing was that she claimed when they moved here they really just wanted to lease, but nothing like this monstrosity was available.
Talk about a double-whammy and some mighty bad timing.
Actually, triple whammy. Her husband is a exec with a financial firm who insisted she quit her job as a professor to raise the kids.
I feel sorry for them. Just a bit.
The Tim » May 12, 2009 at 10:17 am
RE: biliruben @ 36 – Wow. It’s stories like this that make me think maybe I should become a financial counselor. My slogan could be “Equipping you to stop making stupid, dangerous, and suicidal financial decisions.”
biliruben » May 12, 2009 at 10:25 am
You’d think a CFO with a financial firm would have a bit of clue, wouldn’t you?!?
Racket » May 12, 2009 at 10:31 am
Do all window washers have clean windows?
biliruben » May 12, 2009 at 10:52 am
Heh. Good point, Racket.
I used to take my old prelude to a mechanic who specialized in Hondas. For over 2 years his own prelude, exact same as mine, was sitting on blocks in the back of the shop.
It really puts to lie to the idea that the financial firms saw it all coming but just grabbed the money while the grabbin’ was good. Probably 95% were as clueless as the rest of the populace.
One Eyed Man » May 12, 2009 at 1:40 pm
RE: biliruben @ 40 –
No question about it biliruben! The execs of Lehman, Bear Stearns, WAMU, Wachovia and all the others crossed the event horizon and it was too late to turn around long before they realized they had entered a financial black hole.
As to Racket’s point, I practiced law for 25 years and did some sophisticated estate planning, but I’ve never had a will. Of course then again, I’m not planning on dying either.
Blabs » May 12, 2009 at 5:13 pm
They’ve been selling this line in Portland for a long time. The planners push the “in the future, people will rather live in tiny condos” line to fit their growth management priorities.
Builders are saying that people “prefer” smaller units because by the end, that’s all they could build. My favorite was one of the last condo buildings coming down the assembly line where they were billing “European-scale residences” (i.e. small). That one gave up and converted to apartments not long ago.
If developers are building smaller units, so be it, but don’t give me this “people want smaller houses now” crud. No, people generally want ample single family homes if they can afford them, and a pricing bubble is forcing first-time buyers to settle for less.
Hector » May 13, 2009 at 11:44 am
By Racket @ 35:
Are you able to quantify that demand? If you talk to anyone in my circle of friends, we want yards, that’s why we live in the burbs. Does that mean there is a high demand for yards?
So let’s say there is a huge demand for small yards. What has created that demand? Is it that people actually want it, or is it because larger lots were being marked up as ‘premium’ lots by builders, forcing cash strapped buyers to choose the strip of grass option?