…what the public desires and is willing to pay for! Today, that means energy efficiency, better floor plan designs, smaller lot sizes, less square footage, and less standard luxury materials like Italian marble and Brazilian cherry wood flooring. These building industry changes are premised on buyer demand, transforming demographics, and adjusted costs associated with new homes. Our expectations have dramatically expanded over the last generation or two with new and higher standards and multiplied needs.
The average home built in the 1950’s was 983 sq ft as compared to the peak size of 2,479 sq ft in 2007, according to the National Association of Homebuilders. The average size for a new home in 1978 was 1,650 sq ft. Home sizes grew again in the mid-80’s but stagnated during the national recession of the early 90’s.Home sizes increased significantly from the late 90’s through 2007 in a more robust economy. According to the US Census Bureau, the median size of new homes diminished between Q2 ‘08 and the end of Q3 of 2008; from 2,291 sq ft to 2,090 sq ft.
In many metropolitan areas, sold prices have been below replacement cost, especially relating to standing inventory. Prices have gingerly started to rise and inventory levels (in both new and existing homes) have started to shrink. This is quite evident in the below $450,000 price ranges, while the homes priced up to the $700’s are beginning to benefit from the domino effect of sellers becoming buyers.
And it’s not just the size of homes that have more than doubled over the years. Consumer expectations play a big role. That old 10’ x 10’ bedroom with enough closet space for a Barbie Doll wardrobe is now history. Buyers expect higher ceilings, improved appliances, more windows, skylights, usable basements, and bathrooms. Tougher building codes make homes safer and more functional. Energy efficient windows, increased insulation everywhere, 90% efficient furnaces, higher capacity and safer electric and plumbing features, are all impacting the cost of a new home. Colorado’s largest homebuilder, Richmond American Homes, has stepped onto the stage and is playing to the home buying audience. MDC Holdings (Richmond’s parent company) is building new homes with a base price just under $200,000. “These homes are currently being built in 15 different communities with floor plan designs starting at 1,660 sq ft.” according to a spirited David Mandarich (MDC’s President).
For homebuyers looking for larger square footage in established neighborhoods, the news is also positive. In fact, using the price per square foot calculation in existing neighborhoods is of little value. In a 20 year old (or older) neighborhood, the level of upgrading and remodeling will vary from house to house. Things like basement finishing, new mechanical systems, roof age, etc. can impact the property’s value. And typically, you are not paying retail for such improvements.
Now is a great time to compare the value of a good deal on new construction with inherent values of established neighborhoods. If you are buying your first home, a new (smaller) home, or are considering moving into less square footage, here are a few helpful ideas on making the space more spacious:
- Paint Color – lighter colors make a room feel brighter and larger.
- De-clutter – take everything off the floor…except furniture.
- Extra chairs – place a pair of dining room chairs in the hall flanking a chest.
- Lighting – use less chandeliers and ceiling fans and more recessed and track lighting.
- Walls – avoid hanging too much art in a room; this can feel claustrophobic.
- Replace heavy curtains with sheer products for increased light.
- Think higher and more vertical when placing items like lamps and plants.
No matter which direction your housing needs and desires may take you, enjoy yourself because home prices, interest rates, and willing sellers are holding the window open.
– Steve Blank, Fuller Sotheby’s International Realty Downtown Denver Managing Broker