Downturn Could Alter Tastes in Housing
Virginia McAlester, author of the classic “A Field Guide to American Homes,” said that after this recession she expects smaller homes built closer together, but with more attention to their positioning on the lot to preserve privacy and the occupant’s access to a little spot of nature. Already, new homes are being simplified compared with those built during the go-go years. “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. Soundproofing will become more important when buyers are living closer to their neighbors or 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. Some large suburban homes might be turned into multifamily homes. “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. (www.latimes.com)
Los Angeles Times (1/3/09); Elizabeth Razzi
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In Recession, Home Builders Reduce Square Footage
For the first time in at least a decade, builders are substantially reducing the size of new houses. “We’re trending toward smaller homes,” says Gopal Ahluwalia, NAHB’s director of research. He says growth in the average size of new single-family homes, which went from 1,750 square feet in 1978 to 2,479 in 2007, is starting to reverse. His analysis of Census data shows that homes started in the third quarter of 2008 averaged 2,438 square feet, down from 2,629 square feet in the second quarter. Ahluwalia, who began the quarterly analysis in 1999, says there have been slight dips before, but the latest drop was much steeper and is likely to hold even after the economy recovers. “Affordability is a major problem,” Ahluwalia says, and building smaller usually means cheaper. Also, he says, people are realizing as household size shrinks that they don’t need big homes. (www.usatoday.com)
USA Today (1/9/09); Wendy Koch
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Federal Reserve: How Texas Dodged Most Subprime Trouble
The Federal Reserve Bank of Dallas has put together a study on what specifically helped Texas avoid the same pain other states have felt through the mortgage meltdown and recession. Tight regulations on lending, housing price appreciation, steady job growth and a strong state economy are the keys, said Anil Kumar, a senior economist for the bank. In 2005, Texas matched the U.S. with 8% of its subprime mortgages more than 60 days past due or in foreclosure, according to the study. But in 2008, the U.S. percentage of delinquent subprime mortgages and foreclosures had risen to 20%, while delinquencies and foreclosures in Texas sat at 14%. One reason Texas borrowers have been less likely to default on their payments is because the state has strong predatory lending laws and restrictions on mortgage equity withdrawals, Kumar said. “Because of the regulations in Texas, Texas borrowers have been more disciplined, especially the subprime borrowers who did not opt for those subprime mortgages in the numbers and percentages that have been seen in other parts of the country,” Kumar said. “And, in general, [the borrower’s] ability to pay has been higher in Texas and they have defaulted less than people in other parts of the country.” One reason for fewer defaults in Texas is that borrowers have more equity in their homes than borrowers in other states, which has given them more room to avoid mortgage defaults, according to the study. (www.fwbusinesspress.com)
Fort Worth BusinessPress (1/12/09); Leslie Wimmer
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Buffalo Housing Market Among U.S. Best
In a report on Forbes.com conducted by Moody’s Economy.com, the Buffalo, N.Y. area is rated as the nation’s fourth best housing market, joining other upstate New York cities, Rochester, Syracuse and Albany, in a top 25-ranking. Syracuse was second, behind McAllen, Texas, while Rochester was 15th and Albany 21st. Because Buffalo did not cash in on the nationwide housing boom, its market has not been sharply impacted by the bust in real estate prices. However, Mark Zandi, chief economist for Moody’s Economy, predicted that not one U.S. metropolitan area with a population over 500,000 will see prices increase before the end of this year. Housing prices in the Buffalo market are forecast to drop 1%. (www.bizjournals.com/buffalo)
Buffalo Business First (1/12/09)
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Capital Bank Gets Set for Housing Market to Revive
The Raleigh, N.C.-based Capital Bank is adding 15 mortgage officers — more than doubling its current staff — in anticipation of a resurgence in the housing market. The bank, which has 32 branches statewide, is also setting aside more than $20 million for mortgages for high-end homes. The loans will be available for homes costing more than $600,000 that were constructed by home builders and developers that are Capital Bank customers. CEO Grant Yarber said rates will be two percentage points below a standard 30-year super jumbo mortgage for borrowers who qualify. That program would help builders and developers who began building high-end speculative houses before the residential real estate market stumbled. “We believe, in 2009, there are going to be some great bargains on interest rates for home buyers,” Yarber said. “We believe that 30-year rates will be in the 4.5% to 5% range for conventional mortgages. We believe that will spur a lot of people to purchase a new home.” (www.newsobserver.com)
News & Observer (1/9/09); David Ranii
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Nine Projects for ’09 That Make Sense as Home Prices Dip
With existing home sales and home prices in most regions of the country down, it makes sense for home owners to think at least twice about investing in a renovation that will enable them to live better now and make the house more saleable later. According to four Chicago-area builders and remodeling contractors, as well as a senior NAHB researcher and the editorial director of Remodeling magazine, small renovation projects, curb-appeal improvements, energy-efficiency improvements and kitchen and bath remodels all probably make sense this year. “Anything to do with energy today in the home, particularly insulating, reinsulating, caulking, replacing windows or doors or adding more energy-efficient skylights — they’re all very viable things,” said Scott Sevon, president of Sevvonco Inc., a builder/remodeler based in Palatine, Ill. Other green-list projects include low-flow faucets and toilets, high-efficiency furnace and hot water heaters, other energy-efficient appliances and sealing up air drafts in a cold, unfinished basement. “What sells the house is the kitchen and bathrooms,” says Gopal Ahluwalia, NAHB’s vice president for research. Minor kitchen remodels include: upgrading countertops, installing spiffier faucets, replacing appliances, perhaps refacing cabinets that are in good shape — “things that make your house look nice but you’re not spending $100,000, but $5,000 to $20,000,” says Mike Nagel, president of Remodel One in Roselle, Ill. Those who have a bigger budget might consider incorporating better lighting and at least one to-die-for gourmet appliance such as a built-in espresso machine, dishwasher drawers or a multipurpose drawer such as the CoolDrawer from Fisher & Paykel. It changes from a simple pantry drawer to freezer, refrigerator and wine chiller with the touch of a button. (www.chicagotribune.com)
Chicago Tribune (1/2/09); Karen Klages
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