How Big is Big Enough?

If there is one on-going issue of debate it is how large should a housing unit be? The pejorative term “McMansion” certainly says one thing and efficiency studio says another. But what is the right size? To be very honest, I’m not sure anyone knows.

The Home is the Man's/Woman's Castle

I was watching Dr. Zhivago last night and the issue of space became a political moment. As Zhivago returns with stolen wood for the fire, he is faced with the political reality of their home being seized by the Party to house the homeless. At that time, five people to one room was the standard residential model, if you didn’t like it, you could be shot. Nice, I can see the marketing brochure. Spacious one room studio, toilet near, heating optional, minimum four persons per unit.

We have come a long way since those days of the glorious revolution. I’m reminded of their excellent city planning concepts and the endless rows of concrete monoliths. I think at that point the density had been reduced to 3 people per room - progress.

Now it seems everyone is concerned about their neighbor’s house and how big it is. When my father bought his first home in 1955, it was about 850 square feet (for 4 people – Soviet statistics wanting) In the 1970s the average new home size was about 1500 square feet. By 2009 it was about 2600 square feet. It has lowered a bit, according to the National Association of Home Builders. Or has it? Almost one third of new homes have at least three baths, most had three car garages, half are now two stories (more I think to smaller lots than the need for height), and it goes without saying more bedrooms. All this while the average size of the family has gone down.

The prices are also down substantially from 2006 (well, duh), from about $305,000 to $274,400. More house, less money – it’s the market stupid. The trend says that bigger homes are in demand, and of course with the current historically low interest rates, why not. My planning mantra has been for years; “The home buyer wants the biggest house on the biggest lot they can afford.” Fairly simple.

Now as we burn through the housing overhang (insider speech for too many homes - not enough buyers), the trends we see in new homes will set the standards for the next ten years. In an article I read, this was attributable:“more to do with who was buying than with overall consumer tastes.” HERE  And how does the writer know that? These days I don’t believe the home buyers is that naïve and in fact I would say the opposite – and most are opportunists. Buy now (low), sell later (higher) – again, duh! But it is a leap of faith.

That home in Park Forest, Illinois that my father purchased (and added the first garage and fireplace on the street), is still there. It sells today for about $65,000 ($76.47 per square foot). The average home price today is $242,300 for about 2600 square feet ($93.20 per square foot). The “McMansion” with its 4000 square feet is selling in many markets for about $350,000 ($87.50 per square foot). It’s all in the square footage. A good website to get the overall thrust of home pricing since 1963 is HERE.

Or is this their castles?

Much of all this hub-bub about size is about envy and wealth (I won’t go into the other reasons where size is concerned and the same goes a Porsche). It’s also up there with the attack on success and wealth. When the buyer has options, and today he has more than in many past years, they will exercise those options and purchase more wisely that they have in the past. It’s a phase, I know we will return to the norm sometime in the future (for good or bad), but as always the home building industry is critical to the future growth of the US economy. It is one thing that can’t be outsourced (no matter how hard they’ve tried).

Stay tuned . . . .

Whether Density

A client has asked for an analysis and examples of various housing types we may propose for a large project that might even become a master planned community someday (see my Are master Planned Communities Dead?). What started out as an exercise of product and density types has now led to a serious discussion and speculation about the future of housing densities in general. What will the buyer in 2016 want? What can they afford? Why would they even buy a house? Will they rent or purchase?

As I have discussed in previous blogs, I am a true believer in demographics and growth. This is consistent with other writers such as Joel Kotkin, Wendell Cox, Aaron Renn, and a new information source Neil Howe and Richard Jackson . These writers continual go back to the base precept: growth in the United States will continue. Unlike Japan and Europe and to some degree China, who all will suffer from aging and non-expanding populations, America will continue to grow through immigration and internal birth rates. Maybe not at the Boomer rates of the 1950s, but at an expanding and sustainable rate. The future of housing is bright but difficult to see through the current economic fog.

So how will the new American home differ from the past? If we look at the historic residence of one hundred years ago, especially after the Civil War, the middle to upper middle class house (other than its technologies) was similar in size and square footage. The urban lot sizes tended to be smaller, but not always. Riverside, Illinois with its large lots set a market tone; but it too ran into a market crash that affected its completion. The row house for the working population went up by the thousands in eastern cities to support the new mills and factories (mostly rental). The detached and semi-attached stacked flat appeared. The homes planned and built during the 1920s (an era not unlike 2003-2007) were typically lots of 4,000-6,000 square feet (sf) and the house 800 to 1,200 sf. Many of these still stand on the west side of San Francisco and the nearer suburbs of Chicago and New York. The basic numbers haven’t changed that much. And remember these were built four and five at a time; there were no KB Homes, Lennar, and DR Hortons out there.

The trends today are all over the place. The housing density depends on where you live, as it always has. Typically the closer to the urban city center the housing is, the smaller the lot and denser the housing types. These will range up to hundreds of units per acre with a high rise building in the urban center itself. But the conversation with the client is about the third and fourth urban rings of growth from the urban center not the immediate core or adjacent lands that are now redevelopments and reuses of older urban land uses. These areas are the marginal new suburbs and, while in-fills, they tend to be denser and more vertical than the suburbs of the 1960s and 70s. Podium housing (residential on a deck over parking) is not profitable or even marketable here. Vertical mixed use is a planners dream and totally unworkable. Lifestyle is one of the keys as well as value, price, and, as always, location.

The buyer or renter comes to the marketplace with a predetermined idea of his ideal residence. A future resident from Manhattan has a very different idea of their personal heaven then someone from Denver or the San Fernando Valley. They all make decisions based on their own personal habits and needs. Kids are fewer than when I grew up in the 1950s. We collect more things (even in these times of austerity), want more entertainment space, beds are bigger (figure that one out for yourself), so some rooms are larger and others smaller or are no longer needed. Storage, cars, and as George Carlin said “Stuff.” My simple projection is that there will be little difference in the overall type and density than what we have built during the last one hundred years. We are not going back to the communal longhouse, public baths, and living in three rooms over the store. In the future of growing populations and urban densities, privacy and attached separateness will be very important to retain some sense of personal sanity and family.

These are some of the trends and product types we discussed:
 Urban infill clusters of lots on private and secured streets. Now called in the builder jargon six-packs, eight packs or courtyard clusters, these will feature detached homes, 1200 to 1500 sf, garages, two stories, with heightened security and monitored access. Outside space is minimal but adequate. Properly done these could also focus on seniors and possible rentals. Density: 10 to 14 units per acre, in sets of ten to twenty integrated complexes.

 Detached row homes on private streets. These will be dense with small lots in neighborhoods with internal and private open space. Lots will be 2500 to 3000 sf. The houses may reach 3 stories for some markets to push up the square footage. Again a garage will be important for the buyer, most will be alley accessed. Density: 8 to 12 units per acre, these tend to be neighborhoods of at least 50 units.

 Urban courtyard cluster: This is a variant of the alley cluster that allows the fronts of the houses (detached and attached) to face an interior private garden space. Lots are 1800 sf to 2400 sf, the green court is about 10,000 sf. Density: 10 to 12 dus per acre, sometimes denser depending on the house width.

 In rental I see a rebirth of the two story walkup garden apartment, lots of common space and amenities. These may be large enough to encourage seniors to replace their house with an apartment.

 I still believe the old standard 4500 to 6000 sf lot has merit, especially in the third and fourth rings of suburban expansion. These range from 55’ x 80’ to 60’ x 100’ and many variants between. Wide shallow, zero lot line, shared easement all fit in this box. House sizes are all over the place from 1200 sf to over 3500 sf depending on the market. While the neo-traditionalists may whine about the product, they still are the primary money maker in the industry and will be important in the rebirth of the industry.

Affordability will be the initial key to a resurgence. How this is achieved will be the critical. Cheaper land, lower fees (in a time of city government needs), smaller footprints, higher density, lower shared costs (such as HOA facilities and services), and more efficient construction methods will be important parts to the future cost of housing formulas.

Stay tuned . . . .