Recession Design: Smaller footprints

The housing crisis is rippling through the construction industry, and not just in the form of shrunken revenues. Lennar Corporation, the Miami-based home builder, is reducing the number of home plans it offers in an effort to lower construction costs and appeal to local consumers.

In a recent conference call, where Lennar reported that revenues for 2009 were down by nearly a third, the company's chief operating officer disclosed that the company was streamlining the number and type of models it offers to homebuyers.

The changes reflect a larger shift across the housing market. Gone are the McMansions of the easy-credit days. Small and efficient (such as the Lennar model pictured) is in.

In Phoenix, Tucson and Las Vegas, for example, Lennar now offers 15 plans, down from 40. "These plans have simplified architecture yet offer design, lifestyle and energy saving features that is attracting new home buyers," said the exec, Jonathan Jaffe. What's more, the simplified offerings have helped reduce construction costs by 12 percent, he said.

Alan Jones, Lennar's Arizona Division President, told HousingWatch that Lennar leaders from Tucson, Phoenix, and Las Vegas collaborated to standardize designs in the Southwest region. For instance, he said, in one Phoenix community Lennar used to offer six home plans averaging 2,300 square feet. Now, the company offers four "more efficient" plans totaling 1,960 square feet. The company also streamlined its amenity choices, in some cases choosing one of three "levels" of amenities for each community rather than making multiple levels available.

In Lennar's "Horizon at Stetson Valley" community in Phoenix, the newer home plans feature footprints as little as 1,400 square feet for a three-bedroom, two-bath home, or 1,760 square feet for a four-bedroom, two-bath home. And prices start under $200,000.

"It makes sense to me that they would do that," Stephen Melman, an economist at the National Association of Home Builders in Washington D.C., tells HousingWatch. "It's almost analogous to the automobile industry. In the past six or seven years, builders have given customers an explosion of choices."

Home designs and size tend to reflect the economy, Melman says. Since 1973, home plan sizes have consistently trended upwards alongside the economy -- except during recessionary economies in the mid-1970s, early 1980s, and early 1990s. In the second quarter of 2008, he says, the median floor area of a new home in America was 2,216 square feet. The third quarter of 2009? 2,094 square feet.

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