Home Front: Small home makes big splash in Sacramento development
By Jim Wasserman
jwasserman@sacbee.com
http://www.sacbee.com/business/story/2108425.html?storylink=pd
The K. Hovnanian-built house in Natomas has a standard-size bedroom and a surprisingly large great room that combines a kitchen and living room. But that’s about it for 817 square feet – likely the smallest new house for sale in Sacramento. Price: $126,000.
Home Front discovered this seventh wonder of the real estate world via colleagues who got builder postcards aiming to pry boomers out of Land Park and east Sacramento and into Four Seasons in Natomas.
Seeing the house – very livable, but suited, petwise, for a fish tank or bird cage – raised a question of why builders don’t add more of these into their sales mix? This house was a bit of a fluke; a handful of them were built for irregular lots. Sales consultant Dee Elrod said there are no plans for an entire tract of these. The company didn’t offer comment.
But an Internet search revealed that KB Home recently tried something similar, selling 880-square-foot homes in Houston for $64,000. The idea was to compete with bank repos. But 1,200 square feet is likely to be the smallest KB house that Northern Californians see, said KB spokesman Craig Lemessurier.
Today, an 800-square-foot home makes a novelty item in a real estate column. But once this was the norm. The 2002 book “Affluenza” says homes in the pioneering New York suburb, Levittown, were 750 square feet in the 1940s. Average size grew to 950 square feet in the 1950s and to 1,350 square feet by the 1970s, the book states.
In 2003 in the Sacramento region, average home size peaked at 2,612 square feet, according to statistics from the Gregory Group, a Folsom consultant. Average size is now about 2,375 square feet. Ask home builders what’s ahead and they all say smaller still.
Downsizing – say to 1,200 square feet or 1,400 square feet for first-time buyers in the Sacramento region – is a routine effect of recession, history shows. But it also happens when buyers hew to an old-fashioned rule of real estate: buying at a price three times their annual household income. Builders say buyers have to toe that line now. They can’t get loans to buy higher.
“I just think smaller houses fit into the new profile,” said Kevin Carson, a former John Laing Homes executive and president of the Sacramento division for the New Home Co. based in Orange County. Carson targets move-up buyers. Yet he says, “There won’t be the mini mansions that were built so much five years ago.”
Indeed, many big boom-time houses have proved foreclosure-prone, expensive to cool and vulnerable to frightening drops in value. For a long time to come they’ll be monuments to the euphoric era that built, financed and sold them.
Meanwhile, nothing marks a new era so abruptly as an 817-square-foot house. Obviously, it can be done – and done well. The question is: why isn’t more of it being done?
Home-builder merger
Tuesday will bring a colossal merger in the nation’s home-building industry, a union of the Sacramento-Reno division of Pulte Homes of Bloomfield Hills, Mich. and Dallas-based Centex Homes.
Both firms, individually, are already among the capital region’s biggest builders. The merger will create a Wall Street giant in the region that can take a buyer from Centex’s traditional starter homes to Pulte’s traditional move-up homes to Del Webb’s houses in post-55 adult communities. Del Webb is a subsidiary of Pulte.
Combined, the three entities held a 17 percent market share of new-home sales the first half of 2009 in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to Hanley Wood Market Intelligence of Costa Mesa.
No comeback yet
Home Front caught up this week with Sidney B. Dunmore, former head of failed Granite Bay-based Dunmore Homes.
As the first area builder to go under during the housing bust it’s inevitable that Dunmore would be among the first rumored to be starting some kind of comeback.
Not so, Dunmore, 54, said in a phone conversation. Not yet. He denies there’s a new business venture sniffing around for land to start over.
“I’m always looking. I’m always looking at opportunities,” said Dunmore. “I can’t really say I’ve found anything at this time. But I’m still in the hunt if some opportunity pops up. But there’s nothing on the horizon.”
Dunmore Homes filed for bankruptcy in November 2007 and was liquidated in February 2008 – after more than a half century in business and construction of 22,000 homes. Dunmore described the current building industry economy in the capital region as “pretty flat.” But at least it’s finally stopped getting worse, he said.
