Homebuilders Moving To Small Homes, Fewer Extras
Los Angeles, CA, Oct. 14, 2008--Homebuilders like KB Home that thrived by offering large homes and expensive amenities have began to rethink their home designs with an eye toward making smaller, less costly homes.
Three years into the downturn, that trend appears to be intensifying, as many builders scramble to make their wares palatable and affordable to first-time buyers and compete with a trove of preowned homes and deeply discounted foreclosed homes on the market.
Los Angeles-based KB, which builds homes to order, began downsizing some of its floor plans last year.
The company initially pared down 3,400 square-foot homes that sold for around $450,000 to smaller, 2,400 square-foot homes selling for around $300,000.
Now, the builder is shrinking floor plans again. It recently launched a new line of homes in foreclosure-ravaged Southern California that start at 1,230 square feet and are priced a little over $200,000.
Other builders, including Warmington Homes and John Laing Homes, have taken similar steps, as the industry seeks to stem losses due to falling home prices, tighter mortgage lending standards and skittish buyers. New home sales fell in August to the slowest pace in 17 years, while the median sale price fell 5.5 percent to $221,900.
The trend in smaller homes is a reversal of more than two decades of expanding floorplans, during which median size single-family went from less than 1,600 square feet to more than 2,200 square feet.
Beyond competing with preowned homes on the market, declining home prices have also made it less profitable to build large homes.
KB Home began to rollout its most recent iteration of smaller homes earlier this summer in Beaumont, Calif., as part of a development dubbed Highland Vista.
The homes are 1,230 square-feet and have three to five bedrooms.
Previous KB Home developments in the Beaumont area were built with homes in the 3,000 square-foot range.
Homebuyers' tastes, possibly influenced by tighter mortgage lending, are also helping drive the changing trends in new homes.
Big formal entries, high ceilings and lavish light fixtures are also not as high a priority among many buyers these days, said Linda Mamet, vice president of sales and marketing for Irvine, Calif.-based John Laing Homes.
Morris said fewer buyers are opting to upgrade from a standard laminate kitchen countertop to a granite countertop.
The builder also has downgraded the level of amenities and finishes built into its showcase homes, to reflect the base price of homes.