High-End Homes Frozen Out of Budding Housing Rebound
Sales of existing homes priced over $750,000 accounted for 2.3% of all sales in the first quarter of this year, compared to 4.4% of the housing market in 2007, according to the National Association of Realtors®. But the distress in the high-end market has implications for consumer spending because the top 10% of U.S. households in terms of income accounted for 23% of all consumer spending in 2007, according to government statistics; as these households watch their home equity evaporate, they are more reluctant to spend on housing upgrades or other items. Overall, the nation’s inventory of unsold homes in June was enough to last 9.4 months at the current selling pace, down from 11 months a year ago, according to the Realtors®. But the supply of unsold homes priced above $750,000 swelled to around 17 months in June, up from a 14.5-month backlog one year earlier. A recent J.P. Morgan Chase & Co. forecast said it would take until at least 2012 for the expensive-home market to recover. Among prime mortgages, jumbo mortgages are now leading delinquencies and defaults and are the fastest-rising category for defaults of all types of mortgages. The rate of 60-day delinquencies on prime-jumbo mortgages jumped to 7.4% in May, from 4.5% in November, according to First American CoreLogic. By comparison, 60-day delinquencies on prime-conforming loans reached 4.9% in May, from 3.6% in November. In a recent survey by the Realtors®, nearly three-quarters of real-estate agents said buyers were purchasing smaller houses due to tighter credit requirements. “We’re in a ‘trade-down’ environment for the first time since the 1930s,” said Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California at Berkeley. (www.wsj.com)
Wall Street Journal (8/3/09); Nick Timiraos and James R. Hagerty
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Norwalkers Simplify Home Transitions
The recession has spawned a whole new set of clients for Home Transitions, a business based in Norwalk, Conn., that provides people who are trying to “right-size” their homes with moving assistance, staging, organizing, de-cluttering and rearranging a home or room to make it feel “fresh.” Many people, the company’s owners said, are realizing they don’t need mansions with mega-sized floor plans. This is especially true of couples whose children have moved out. “The economy has dictated a need for this,” said co-owner Cathy Kraut. “They don’t need these big homes anymore. It’s downsizing. It’s right-sizing.” The trend toward smaller homes is confirmed by an NAHB survey in June in which 59% of the home builders said they were building smaller homes. (www.thehour.com)
The Hour (7/31/09); Chris Bosak, McClatchy-Tribune Regional News
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Jewel-Box Homes Are Built Smaller, Smarter
The current recession, the downturn in the housing market and the emphasis on energy-efficiency all are playing into the “jewel box house” trend in which small homes are designed with top-quality materials, upscale detailing and custom built-ins. Tailored to the owners’ way of life, smaller houses suit a variety of demographic groups — including newlyweds, young professionals, empty-nesters and retirees. Huge houses with hotel-scale foyers, formal dining and living rooms and vast master suites with spa-style bathrooms are out of sync with the informal way Americans live today, says architect Sarah Susanka, author of “The Not So Big House.” In most houses, the kitchen is the heart, the place where family and friends gather. Americans take quick showers, they don’t luxuriate in soaking tubs. Not surprisingly, the home-furnishings industry is attuned to the downsizing trend, says Jackie Hirschhaut, vice president of marketing at the American Home Furnishings Alliance. Increasingly, manufacturers are making furniture that is smaller and more multipurpose: love seats instead of sofas, expandable dining tables, home-office armoires with fold-down work stations and compact corner units for big-screen TVs. (www.orlandosentinel.com)
Orlando Sentinel (7/30/09); Jean Patteson
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Healthcare, Green Tech Brighten Dim U.S. Job Picture
Demand for green retrofitting, home weatherization and solar-energy panel installation has lagged due to tight cash and credit on the part of recession-battered home owners and businesses. “I’m struggling just to keep my door open,” said Alan Abrams, owner of a remodeling and construction firm in Washington, D.C., who recently took a crash course in green design from NAHB. “The manpower is there. The manpower is hungry, believe me.” Labor experts say green retrofitting should pick up and produce more jobs once economic stimulus money begins to flow. Abrams said too much emphasis appeared to be placed on solar power, wind energy and other high-tech alternatives, as opposed to improvements in energy conservation that he says are more cost-effective and yield a faster return on investment. “You’ll absolutely get much, much more for your money with a caulk gun than you will with a photovoltaic cell,” he said. (www.reuters.com)
Reuters News (7/30/09); Steve Gorman
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White Roofs Catch on as Energy Cost Cutters
Relying on the centuries-old principle that white objects absorb less heat than dark ones, home owners like Jon and Kim Waldrep of Sacramento, Calif., are in the vanguard of a movement embracing “cool roofs” as one of the most affordable weapons against climate change. Studies show that white roofs reduce air-conditioning costs by 20% or more in hot, sunny weather. Lower energy consumption also means fewer of the carbon dioxide emissions that contribute to global warming. What is more, a white roof can cost as little as 15% more than its dark counterpart, depending on the materials used, while slashing electricity bills. Art Rosenfeld, a member of the California Energy Commission who has been campaigning for cool roofs since the 1980s, argues that turning all of the world’s roofs “light” over the next 20 years could save the equivalent of 24 billion metric tons in carbon dioxide emissions. However, some roofing specialists and architects argue that supporters of white-roofs fail to account for climate differences or the complexities of roof construction. In cooler climates, they say, reflective roofs can mean higher heating bills. Scientists acknowledge that the extra hearting costs may outweigh the air-conditioning savings in cities like Detroit or Minneapolis. But for most types of construction, they say, light roofs yield significant net benefits as far north as New York or Chicago. Although those cities have cold winters, they are heat islands in the summer, with hundreds of thousands of square feet of roof surface absorbing energy. (www.nytimes.com)
New York Times (7/30/09); Felicity Barringer
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Quadrant Homes Ramps Up New-Home Production
Quadrant Homes, the largest home builder in the state of Washington, last month increased total production at its 14 developments in the Puget Sound area from two completed houses per workday to three, according to company president Peter Orser. That’s still way down from the seven homes a day Quadrant was building in late 2007. “There are a few stirrings of life out in the marketplace,” said Bill Hurme, president of new-home marketing firm Team Builder JLS. “Quadrant is the 800-pound gorilla in this market. Maybe they’ll be the leaders, and the rest of us will follow along.” Orser said Quadrant generally doesn’t start building houses until they are presold. He wouldn’t provide sales figures, but said presales improved enough starting this spring to justify the production boost. He attributed the sales increase to reduced prices, low mortgage interest rates, Quadrant home buyer incentives and the new $8,000 federal income-tax credit for first-time buyers. More than 85% of Quadrant’s buyers during the first six months of this year were first-timers, Orser said. They paid an average $277,000 and 78% paid between $200,000 and $300,000. Quadrant now will have 162 houses under construction at its developments in King, Snohomish, Pierce, Kitsap, Thurston and Skagit counties on any given day — up from 108. (www.seattletimes.com)
Seattle Times (7/28/09); Eric Pryne
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