This past Thursday I saw the Al Gore film An Inconvenient Truth. A better title might be "A Very Uncomfortable Truth". The evidence about global warming — and the speed of it — is frightening, and our contribution to it, as consuming Americans, is pretty despairing. Ultimately, its a very important film and I enourage everyone to see it.
So what does this film plug have to do with real estate? Also last Thursday the government released its annual "Characteristics of New Housing Report" for 2005, containing every imaginable statistic about new housing construction in the U.S. (Want to know what percentage of houses were vinyl sided in the Northeast versus the south, or the average porch size by region? Its all here in 798 fact-crammed pages.)
One of the most interesting statistics is "average house size" in square feet. Houses in the U.S. just keep getting bigger. In 2005, the average new house was 2,434 sq. ft., up 3.6% from 2004. In just 5 years, between 2000 and 2005, the size of new houses climbed 7.4%. In 20 years, between 1985 and 2005, houses increased 36% from 1,785 sq. ft. to today’s 2,434 average.
And these are just averages. In 2005, 23% of new houses were over 3,000 sq. ft. In 1988 (the first year that the government split out houses above 3,000 sq. ft.), just 10% of new houses were in this size category.
Bigger and bigger houses are certainly a function of cheap money and cheap energy, both of which are getting more expensive. It will be interesting to see if the trend to bigger houses will reverse, as they come more expensive to finance, heat and cool.
In the second home market, I’m particularly struck by growing size requirements. When I was little (which admittedly was quite a while ago), the vacation cottages owned by my extended family were pretty modest, probably no more than 1,000 or 1,200 sq. ft., if that. We kids slept in bunk beds. Weekend guests were happy on a pull out sofa. Big screened porches served as back-up guest space. There was little privacy, and luxury was getting a hot shower before the tank ran out. But even with these ‘deprivations’, those rustic summer cottages were very special places.
Today, vacation homes in most demand differ from their primary counterparts mostly in style, not in size or functionality. The same great rooms, master baths, open kitchens, family rooms and yes, even media rooms, are cloaked in an Adirondack or farmhouse style wrapper — but otherwise are functionally similar to many primary homes.
Size and feature bloat is a major contributor to higher prices for new homes. Among the 30-something second home buyers I often work with (and frequently write about in these pages), there’s huge demand for a $300,000 second home product. But most new construction targeted at the second home market has been priced above $450,000 – with a minimum of 2,000 to 2,400 sq. ft.
The developers and builders say that there isn’t a market for smaller, less expensive houses. But as energy and financing costs rise, I question whether the market will continue expanding for their larger, more expensive houses.
The challenge, I believe, is to bring to market a functional and appealing 1,500 sq. ft. second home that is both affordable to buy and more important, affordable to maintain. (People complain bitterly about property taxes, but smaller houses also have lower taxes.) Is it possible to build an appealing vacation house in the Catskills that, excluding financing, could be maintained for less than $6,000 to $7,000 a year (including insurance, property taxes and heat/utilities)?
It is possible, but it requires re-thinking on both the part of buyers and builders. Some of those extra bedrooms for guests could be replaced with ‘bunk nooks’ or semi-private sleeping areas. Living rooms could become smaller, while screened porches could become larger. "Wet areas" that require plumbing (kitchen and baths) could be clustered in an area that could be heated separately, so the non-wet areas could be allowed to go cold when no one was in residence during the winter.
I often think about ships as a model for ‘sustainable’ housing. Cabins on a cruise ship are small, but very functional, with every square foot used efficiently. And those drop down upper bunks double sleeping capacity when needed.
Some of the smaller Dwell Homes by Empyrean designs come close to this model, and the challenge of very functional, well designed smaller houses is being taken up by a number of younger architects.
A particularly interesting design is the Porch House (left) by Gregory La Vardera. But the big question mark is whether consumers will buy them, and give up some of the ‘luxury’ features like huge vaulted spaces, grand bathrooms and massive gourmet kitchens we’ve come to demand.