Real estate demand shifting to smaller houses

smaller homes heat up a cold marketThe challenge for builders these days is making less real estate seem like more -- less square footage for less cash, while retaining a feeling of spaciousness.

Builder magazine recently spotlighted 10 communities where making do with less -- less than 2,000 square feet, to be exact -- is synonymous with builder's success. The communities range from Raleigh, North Carolina, to California's Central Valley. Some builders struggled through the recession while others took advantage of depressed prices to stake a claim.

Many appear quite innovative, bridging the needs of first-time home buyers with those of down-sizers. A few builders, however, have a more curious idea of what "smaller" means. The sales manager for Old Orchard Woods, in the Chicago suburbs, for instance, brags that some buyers wanted more than the one-bedroom homes the complex offered.

"Instead of just having homes at $257,000 for a one-bedroom," she told Builder, " we have sold homes up to $2.2 million" to buyers who bought three units and linked them together. Others included in the top 10 have upstairs bonus rooms that add square footage as they are finished over time.

Some of the complexes featured include:
  • Southern Oaks in Raleigh, where the single-story ranch houses attract the more mature audience and the average $192,000 price tag appeals to newbies.
  • Kings Trace homes in St. Augustine, Florida, where the 1,888-square-foot "Jessica" model, with three bedrooms and two baths, a great room, a "flex" room and second floor bonus space, is the best seller, going for just under $200,000.
Blanford Homes in Phoenix, was a golf course development that had fallen on hard times until it was scooped up by a new builder, who did away with basements and other amenities to create homes as small as 1,260 square feet. "The day I opened, we were selling a two-bedroom, two-bath, two-car garage Italian villa for $134,900," said Mark Ramundo, the company's sales representative. "I have to tell you, people were throwing checks at me."
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