America Is Super-Sizing Its McMansions
BOSTON ( MainStreet) The National Association of Home Builders says the typical new-construction house has a record size and price tag these days and is more likely than ever to have at least four bedrooms, a three-car garage and other luxuries.
"[New-home buyers] want more living space and want homes that will help them run their lives run more efficiently," NAHB economist Steve Melman says. "It's all about how you can get the kids off to one side of the house where they're quiet, or how you can design the house so there's a large kitchen that guests will find is an entertaining place to be."
Melman and his NAHB colleagues analyzed the latest U.S. census data and found that new-construction houses sold last year fetched a record $324,500 on average. That's some 74% above 1973's average even after accounting for inflation.
Houses that developers built for sale (as opposed to those built for rent or commissioned by specific buyers) also averaged a record 2,457 square feet of living space, or nearly 60% higher than 1973 levels.
Researchers also found that half of last year's built-for-sale homes had at least four bedrooms, 36% had three full bathrooms or more and 23% offered a three-car or larger garage all record highs.
Melman says the average new home is getting bigger, swankier and more expensive because stricter mortgage rules and a still-shaky housing market generally mean only well-heeled Americans are buying newly built places these days.
"These are buyers who for the most part already own homes but want something better a certain design, certain amenities and a certain location," he says. "They're not first-time buyers who are willing to give up a fourth bedroom to save money."
The economist says first-time buyers accounted for only some 16% of last year's new-home sales, or about half of their usual roughly 30% market share.
At the same time, he says, builders are finding bank loans, developable land and experienced construction workers in short supply. "You had a well-oiled construction industry [during the early 2000s housing boom], but when there was a downturn, many people left," Melman says.
The expert says a shift to high-end homes has historically happened after every U.S. recession or housing bust and lasted for a few years.
So he expects newly built homes to keep getting larger, fancier and costlier for a while albeit at a slower pace over time.
Melman says contractors will eventually build more starter homes as first-time buyers trickle back into the marketplace, while rising prices will convince existing-home owners to renovate rather than move.