New money-saving home designs
Back in the heyday of housing, prospective buyers could walk through hundreds of models, an activity that took a big hit because of the housing collapse. But new models have started to pop up again.
The Amato family, from left, Tracey, Stefano, Antonio and Michael, is in a new William Ryan Homes model. The Amatos, who are expecting another child, bought a two-story, four-bedroom Jackson floor-plan home that is under construction in Elgin. (Stacey Wescott/Chicago Tribune photo)
Back in the heyday of housing, prospective buyers could jump in the car and drive to the many new subdivisions throughout the Chicago area to walk through hundreds of models, decorated with all the latest glitz and cutting-edge features.
That activity took a big hit because of the economic collapse, as some home builders closed subdivisions and went out of business, while others stopped building new models.
But now, as a possible sign of a modest housing recovery, new models have started to pop up again.
"Builders are redesigning their models," said real estate analyst Steve Hovany. "It's happening nationally as well as locally. Houses got too big and expensive. That era is over. We're slowly starting a new cycle, and new models are part of it."
These new models have slimmed down, shrinking in size and price from five years ago.
"Builders are facing reality. Prices are down 25 percent (from their peak). They're rethinking the market. Now it's back to basics. People are buying what they actually need, not what they want," said Hovany, president of Strategy Planning Associates in Schaumburg.
He noted that the bulk of consumers in the market today are first-time buyers, "but they have less money than first-time buyers in previous generations." So prices have to be adjusted to fit their wallets. Gone in today's new models are the over-the-top frills so common during the building boom such as four-car garages, balconies overlooking two-story family rooms, master suites with separate sitting areas, glitzy bathrooms, kitchens with industrial-strength appliances and, of course, McMansion-size models. Even such popular upgrades as fireplaces and basements are not selling as buyers try to save.
New model homes are being built in the Chicago area for three main reasons, according to real estate analyst Tracy Cross.
"Some builders are changing their product to conform to realities in the market," said Cross, president of Tracy Cross and Associates in Schaumburg. "Other models are being built after a project has been taken over by the bank and another builder steps in to complete the job. Sometimes a closed development will fire up again. That has happened at Talamore in Huntley, where Lennar shut down 24 months ago, but is now offering new town houses."
He pointed out that builders are more cautious in today's economic climate. "Instead of modeling all the homes in a product line, they build only one or two models."
When will housing rebound? "There's a little rumbling of recovery, but we're not in the starting blocks yet," Cross said.
An expert with the National Association of Home Builders is more optimistic. "When builders do models, it means they have confidence," said Steve Melman, director of economic services at the NAHB.
Melman said a projected increase in housing starts is a positive sign: "We're starting to see momentum. There were 442,000 housing starts nationwide in 2009. We estimate there will be 571,000 starts this year and over 800,000 in 2011."
Meanwhile, one builder in the Chicago area explained why today's new models are changing.
"New designs are market-driven," said Ray Blankenship, area vice president of Town & Country Homes. "Even fireplaces have dropped off people's wish list. Our new value plans use an efficient box-over-box design. We've reduced square footage by eliminating excess space in hallways. Also, buyers are no longer looking for two-story foyers."
While the purpose of models is to sell houses, they also are having another impact: "New models help to increase the confidence of buyers. They see new models and they figure the builder is not broke," Blankenship said.
Town & Country has opened its new value-designed models at Hunt Club and Churchill Club in Oswego and Liberty Lakes in Wauconda. Prices start at $195,995 for 2,052 square feet at Hunt Club and $199,995 at Churchill Club and Liberty Lakes.
"Single-family home sizes are down dramatically. There's been a return to the three-bedroom plan with 1,650 to 1,700 square feet," said Chris Naatz, Midwest director of marketing for Pulte Homes, the owner of Del Webb, which builds developments for those 55 and older.