Builders Downsize the Dream Home
By MICHAEL M. PHILLIPS
SMYRNA, Ga. -- For the first time in four decades in the luxury-home business, executives at John Wieland builders are thinking the unthinkable: Maybe houses in the South don't really need a fireplace.
They're also wondering whether new homes require 4,700 square feet of living space. Or private theaters with 100-inch screens. Or super-size-me foyers.
At 2,450 square feet, this new Wieland home in North Carolina looks like a cottage compared with some of the 3,900-square-foot models down the road.
As they draw up blueprints for the house of the post-recession future, builders are struggling to distinguish among what home buyers need, what they want and what they can live without -- Jacuzzi by Jacuzzi, butler's pantry by butler's pantry.
"You have to keep taking things out until you hit a critical point where people reject your product," said Jeff Kingsfield, senior vice president of sales at Smyrna-based John Wieland Homes & Neighborhoods.
It's an experiment brought on by necessity. Two years ago, closely held Wieland was building 1,800 houses a year in posh subdivisions in Georgia, Tennessee and the Carolinas, selling for an average of $650,000 apiece. Today, the company is closing on just 600 homes annually, according to Wieland. It has slashed staff to 330 employees from 1,100.
The American housing market continues to drag, with the Mortgage Bankers Association reporting Thursday that applications for home-purchase loans have hit a nine-year low, plunging a seasonally adjusted 11.7% in the week ending Nov. 6 from the previous week. U.S. sales of newly built homes have fallen sharply as well, from 1.3 million in 2005 to 485,000 last year. The latest Census Bureau data suggest that this year's sales will be even lower. Just 294,000 new homes sold through the first nine months of this year.
More often than not, builders say, post-crash buyers of new homes want smaller and simpler. The average new single-family house peaked at 2,507 square feet in 2007 and has since slipped to 2,392 square feet, according to Census Bureau data.
Average prices are sliding, too, by 16% -- to $269,200 -- between the first quarter of 2007 and the third quarter of this year, the Census Bureau reports. Wieland has been hit worse than most. The company's average sales price has already dropped $153,000, to $497,000, or about 24%. And company executives expect that a year from now, 85% of its homes will go for less than $430,000.
That has forced Wieland to design a new range of compact homes and reconsider everything that goes into them. Replacing tiled tubs with fiberglass units can slice $4,000 off of the house price. Skipping the fireplace can slash an additional $3,500. In its place, Wieland is trying out a media wall -- essentially a place to hang a big television, surrounded by shelves.
Last year, Paula Bishop, one of the company's architects, designed the 4,700-square-foot Arden, a 107-foot-long, five-bedroom, three-stairway showcase planned for a lot near Suwanee, Ga. The laundry room was 10-by-7, the mudroom 12-by-8. Including the bedroom, bathroom and his-and-hers walk-in closets, the master suite stretched almost 40 feet. Above the garage was a guest suite with its own kitchen and rec room. A covered breezeway stood off the vaulted breakfast room.
Wieland never built the Arden.
"The price point has dropped in the neighborhood," Ms. Bishop explained.
So the company told her to squeeze 900 square feet and $60,000 out of the original $650,000 design.
The other day, Ms. Bishop sketched a new Arden on tracing paper. She erased the rear staircase and flattened out the bay window. She cut the 94-square-foot pantry in half. She turned the mud and laundry rooms into a mud-and-laundry room. The three-car garage remained, but she redrew it so two cars now had to be parked bumper to bumper.
"I haven't gotten to the second floor yet, but it will be a ton smaller," Ms. Bishop promised.
The trend toward smaller homes hasn't hit all builders evenly. Winchester Homes, a Bethesda, Md.-based unit of Weyerhaeuser Co., is launching five new floor plans between 1,973 and 2,800 square feet, the smallest homes the company has ever produced. Vintage Communities, a privately owned developer in Southern California, plans to unveil a 2,900-square-foot, $1 million-plus model when the market improves -- replacing a 3,600-square-foot house that it had priced as high as $1.5 million in Rancho Santa Fe.
Toll Brothers Inc., a Horsham, Pa.-based home builder whose average home sells for $600,000, reported this week that net contracts for new homes rose 42% in the three months ended Oct. 31. The company says its luxury customers are more skittish about buying than they used to be, but, when they do make a purchase, they still want large homes with all the frills.
Not so Aaron and Meredith Easley, who put aside the temptation to buy a foreclosed 4,500-square-foot manse and instead bought a 3,200-square-foot Wieland home in Pineville, N.C. "We weren't so concerned about square footage," said Mr. Easley, a 31-year-old trainer with BB&T Corp. "I'm not all about keeping up with the Joneses."
In fact, there are few Joneses to keep up with. The Easleys were the first family to move into what's planned to be an 800-home development, living alone amid empty model houses and expanses of graded land. Wieland executives were so happy to have someone move in that they finished the attic level and put in hardwood stairs for free.
"There's a lot more that comes with those McMansions," said Mr. Easley, whose wife is a kindergarten teacher. "There's a lot more cleaning. There's a lot more heating, a lot more cooling."
Wieland believes the market downshift reflects "a fundamental change in the way people are going to want to live," and not just a reaction to scarce credit and insecure jobs, said F. David Durham, senior vice president. "We're not waiting for things to return to the way they were."
The shift is visible at BridgeMill, a Wieland subdivision in Lancaster County, N.C. The early houses, built near the front gate during the go-go years early in the decade, are massive brick structures. Further inside come the post-boom homes, more cottage than mansion.
The juxtaposition can prove awkward for Wieland. The company's new, smaller homes sometimes compete for buyers with bigger houses it built just a few years ago that hard-pressed owners are now reselling at a discount.
The turbulent market has led the builders to ponder just where they -- and their customers -- went wrong. Easy credit allowed some buyers to purchase more house than they could afford. And, in reflective moments, Wieland officials wonder if the builders simply fell in love with the idea of creating giant houses loaded with cherry cabinets, body-spray showers and built-in wine coolers. Builders built them because they could; buyers bought them because they could.
The Etowah, a new model, has a modest stairway. 'It's not about impressing anymore,' says the company's sales chief.
Fearful that their market is evaporating, company executives have spent the past few months trying to figure out what buyers are willing to give up, and what they aren't. On the latter list are four bedrooms, a downstairs powder room, a garage that fits at least two cars, and granite countertops in the kitchen. "We feel that's one of the things homeowners are still holding onto," said Shane Roach, vice president of home-building operations.
The master bedroom must have its own bathroom, with separate tub and shower. The tub is still big, but the jets, standard equipment for at least a decade, are now optional in new models. It turns out few buyers used the jets more than a couple of times. The children get one-piece, fiberglass tub-shower combinations, instead of tiled walls.
The "home-management" center -- a built-in desk in the family room -- has disappeared from the newest plans. Such luxuries are now available at an extra charge. Window casings are 2¾ inches wide instead of 3½ inches wide in one scaled-down model that Wieland is just now putting on the market. In another, company officials want to move a master-bedroom window from the side wall of the house to the rear. Smaller houses come on smaller lots, and having a window on the side makes it hard to avoid noticing that the neighbor's house is just a few yards away.
The other day, Mr. Kingsfield, the company's sales chief, pulled into a golf-club development near Canton, Ga., and stopped at a lot where workers were listening to mariachi music as they stacked bricks to form the facade of a 3,335-square-foot home called the Madison.
A couple of years ago, a new house in this neighborhood would likely have had a two-story foyer that framed the curved staircase inside. But the Madison's staircase is neither grand nor visible from the front door. In fact, it climbs out of the mud room next to the garage.
"In an ego-driven market, it's where you walk in the door and impress friends with the staircase," Mr. Kingsfield said. "That's gone. It's not about impressing anymore. It'll still be nice. There will still be wood, still be trim. But it's more conservative."
The Madison is more rectangular than its predecessor, the 3,750-square-foot Coventry. Curves and corners add cost. The powder room doubles as the guest bathroom. A folding door will conceal the fiberglass tub from dinner guests.
Ms. Bishop, the architect, is in charge of designing a new series of 2,500-square-foot single-family houses, tiny by Wieland standards of old. They're so petite that the double garage -- 19 feet across -- takes up half of the facade. To combat ugliness, she puts a porch on the other half and decorates the garage doors with trompe l'oeil seams and handles to look like carriage doors.
There's no formal living room or grand entryway. So she joins the family room, kitchen and breakfast area into one open space, just visible down a narrow hallway from the front door.
"People enter and are in danger of being underwhelmed," admits Ms. Bishop.
That's what happened in the Oconee, one of the new economy designs. The master suite absorbed almost half of the second floor. That left little space for the other three bedrooms. The smallest was so cramped that buyers rebelled. Wieland sold one Oconee and then scrapped the design.
http://online.wsj.com/article/SB125807017854346243.html#mod=todays_us_nonsub_page_one
It's good to see this and I hope it continues. We need less egregiously large. stupid and impractical houses with massive mortgages and more modest, economically sized houses that are affordable.
This was designed to sell for $650k? I'm in the wrong housing market...
It was a pretty idiotic trend from the beginning.
