Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 3, 1994 TAG: 9407020003
SECTION: BUSINESS PAGE: F1 EDITION: METRO
SOURCE: Mag Poff
DATELINE: LENGTH: Long
That is the conclusion of the National Association of Home Builders in a report based on its analysis of U.S. Census data.
The median size of new homes increased slightly last year, the association said. And amenities, such as two-car garages and extra bedrooms, became more common.
The association said the statistics reflect low interest rates, coupled with buyers' desires for larger and more comfortable houses.
"The lowest mortgage interest rates in more than 20 years last year allowed buyers to purchase larger homes with more luxury options, according to association President Tommy Thompson, a builder from Owensboro, Ky.
"The long-term trends in housing are clearly shown in this survey," Thompson said. "Not only have new homes become much bigger over the past 20 years or so, but amenities once considered luxury items, like two-car garages, are now standard in today's new homes."
Bruce Cunningham of Christiansburg, president of the Virginia Association of Home Builders, said he had no information about comparable trends for this state.
Robert H. Fetzer, president of the Roanoke Regional Home Builders Association, said Roanoke Valley residents are more conservative and land is less expensive than in other parts of the country.
Still, he said, more people want offices and multipurpose rooms in their homes so they can compute and network with their jobs. Another trend despite rising construction costs, he said, is the addition of bath-fitness centers.
Nationally, the median size of the 1.038 million new single-family homes built in 1993 was 1,945 square feet, 25 square feet larger than in 1992.
However, average square footage remained virtually the same as 1992 at 2,100 square feet and has changed little over the past several years.
The association said this lack of growth in average square footage suggests that fewer very large homes are being built. The share of new homes with 2,400 square feet or more has hovered in the 29 percent range for the past four years, while the percentage of homes with more than 3,000 square feet has stayed at about 13 percent for several years.
As far as price, the market share of upper-end homes - $200,000 and higher - continued to lose ground in 1993, falling to 17 percent of the market. That's down about 3 percentage points from the 1989 and 1990 peaks. The $250,000 and higher category fell to 9 percent in 1993 from 12 percent in 1990.
On the other hand, homes priced between $120,000 and $200,000 have grabbed an additional 5 percentage points of market share since 1991 and now make up 38 percent of the market.
"It's natural that the upper end would stall a bit during recessionary years and that more people would opt for lower-priced homes," Thompson said.
"The great thing about the housing market today is that even people who purchase moderately priced homes do not have to give up luxury and convenience," he said. "Most new homes have all the features that buyers want, such as a fireplace, two-car garage and central air conditioning, as this study shows."
The proportion of new single-family homes with 2.5 baths or more continued to rise, reaching 48 percent of all new homes in 1993. The number of new homes with 2.5 baths or more has risen 10 percentage points since 1987 and has doubled since 1981.
Homes with three or more baths remained steady at 14 percent, but is down from several years ago. Weakness in the upper end of the market explains this downward trend.
Single-family homes with four or more bedrooms captured a 30 percent share of the market in 1993, about the same as in the late 1980s and early 1990s.
Central air conditioning continued to grow more common, appearing in 78 percent of new homes in 1993, up from 77 percent the previous year.
In the South, almost all new homes - 97 percent - featured central air, while in the West the share dropped to 50 percent from 54 percent.
One of the most striking changes over time, the association said, has been the growing prevalence of garages and the growing size of garages.
In 1985, 55 percent of new homes had at least a two-car garage; by 1993, 77 percent of new homes had a two-car garage. Twelve percent of new homes built in 1993 had at least a three-car garage, up from 11 percent in 1992.
Fireplaces remain a popular amenity. In 1993, 64 percent of new homes featured a fireplace, about the same as in 1992, but down slightly from the peak in 1990 when fireplaces were found in 66 percent of new homes.
Gas remained the heating fuel of choice in 1993, capturing 66 percent of the new home market. In 1985, just 44 percent of new homes were heated with gas.
Electricity came in a distant second to gas last year at 29 percent, a sharp decline from the 1970s when electricity was the heating source in the majority of new homes.
Wood and wood products were the most common types of exterior wall materials used. Wood was found on 31 percent of new homes last year.
But wood continues to lose ground, mostly because new home construction has fallen off in the Northeast and the West, where wood is predominant.
Vinyl siding was second in 1993 at 25 percent, followed by brick at 21 percent.
In the multifamily sector, significant size and amenity increases were the trends of 1993.
The median size of new multifamily homes increased by 40 square feet to 1,025 square feet, up 16 percent over 1985. The average size rose to 1,100 square feet, a jump from 60 square feet from 1992 and 19 percent higher than in 1985.
The average size of new multifamily homes increased in all four census regions, with especially large gains recorded in the Northeast and the South. Median size, however, increased in the Northeast and South while declining in the Midwest and West.
The association said growth in the size of multifamily homes results from two factors.
First, the apartment market was extremely weak in 1993, meaning condominiums' share of the market increased, reaching a nine-year high of 30 percent, compared to 22 percent for the past few years.
Because condos are more likely to be larger and have more amenities than rental apartments, their relative strength last year accounted for the increase in size and amenities. In 1992, for instance, about 90 percent of new condos had two or more bedrooms, compared to 65 percent of rental apartments.
Another factor is that more multifamily homes were completed last year in the South - 38 percent compared to 32 percent in 1992 - where new apartments and condos tend to be larger.
The share of new multifamily homes with two or more bathrooms rose 4 percentage points in 1993 to 46 percent of the market after suffering declines since 1990.
More homes were also built with three bedrooms, 18 percent last year compared to 13 percent in 1992 and just 7 percent in 1985.
Central air conditioning was found in 82 percent of new multifamily homes, down slightly from 1992.
Thompson said he would not be surprised to see a slowdown, or even a decline, in size and amenities of multifamily homes.
The 1986 Tax Reform Act stripped away incentives for developers to build low-income rental housing, resulting in domination of the market by for-sale multifamily housing, he explained.
With recent restoration of the low income tax credit program, he predicted, more apartments will be built to fill the need for decent and affordable rental homes for low-income people, Thompson said. "And these apartments are typically going to be smaller and have fewer amenities than for-sale condominiums."
by CNB