News

Infill Invasion

A recent AIA trends survey indicates a growing demand for infill housing projects.

From Builder Magazine

In December, the American Institute of Architects (AIA) released results of its quarterly trends survey that confirmed the growing demand for compact, infill development over suburban sprawl. Previously driven by demographics (young singles/couples and active boomers), and higher development fees and longer approvals processes for new outlying subdivisions, the urban movement now has more economic inspirations: the slumping economy (and housing prices), the fear of high gas prices, and childhood obesity.

“Due to the prolonged decline in housing construction and increasing commuting costs, consumer preferences for community design [are] shifting away from areas removed from metropolitan hubs and toward infill sites that have greater access to public transportation options,” says the report.

The report points out the benefits of building in town, including neighborhood vitality and sustainability. It also references a study published in the American Journal of Preventive Medicine that shows green or compact neighborhood design can help mitigate growing rates of childhood obesity, diabetes, asthma, and hypertension.

With weak house prices in most markets, the AIA survey reports that home buyers are looking for locations where houses will retain value. Infill locations offer more convenient access to employment centers, commercial opportunities, and other daily household activities, bolstering their long-term value.

The “AIA Home Design Trend Survey” is conducted quarterly with a panel of 500 architecture firms that concentrate their practice in the residential sector.

For more information, go to www.aia.org.

The 'McMansion' trend in housing is slowing

By Patrik Jonsson Patrik Jonsson – Tue Jan 6, 3:00 am ET

Atlanta – Complete with an Oval Office and Lincoln Bedroom, the Atlanta White House became a symbol of developers reshaping the urban landscape by tearing down modest ranches and bungalows and plopping McMansions in their place.

The religiously themed mini-White House – which required the razing of three brick ranches – is now up for sale, facing foreclosure this week if the builder, an Iranian-born entrepreneur, can't get a $9.88 million selling price.

New York finance blogger Rolfe Winkler calls it a "delicious story" rife with symbolism about overheated real estate and leveraged dreams that sparked the biggest national real estate slump since the Great Depression.

But the plight of this White House also marks a major shift in the transformation of American neighborhoods – perhaps the end of the McMansion era. Indeed, it may allow thousands of communities from Pasadena to Pittsburgh to more accurately balance the living requirements of modern Americans with a widespread desire to maintain older neighborhoods.

"We're advising communities to take advantage of this slowdown and use it as a cooling-off period," says Adrian Fine, a regional director for the National Trust for Historic Preservation in Washington. "It gives them a little more time to have a less heated and less controversial discussion to protect a specific neighborhood and balance that with the need for growth and development."

With housing prices off by 18 percent in 20 US cities in the last year and new home starts at a 26-year low, bulldozers have slowed their march across American cities and towns.

In Westport, Conn., teardown permits are down in the last year by 33 percent – a figure that experts say can be extrapolated nationwide, though teardown trends do have significant regional variations. Analysts expect the lull to last at least five years, perhaps 10.

Teardown trend slower but not over
"The idea that you're going to make a lot of money tearing down an old house to build a new one, that's gone," says Morris Davis, a real estate economist at the University of Wisconsin in Madison who has advised the Federal Reserve on the teardown trend.

But from towns like Deal on the Jersey shore to Atlanta's Kirkwood neighborhood, some builders are still seeing gold, especially in areas where there are fully depreciated houses sitting on valuable intown lots. Though the teardown pace has slowed, the trend itself has spread exponentially, now often driven by companies with registers where sellers list depreciated homes and builders find properties ripe for redevelopment.

"[Teardowns] are big in upscale markets [where] they haven't fallen nearly as much," says Karl Case, an economist at Wellesley College in Massachusetts, in an e-mail. "The real declines have been in the bottom tiers of the Sunbelt."

Two years ago, the National Trust listed 300 "endangered" neighborhoods in 33 states. In March, the trust expanded that list to 500 neighborhoods in 40 states. Two main factors have driven the teardown trend: Suburbanites returning to cities and urban land values rising meteorically in relation to home values.

With some 75,000 homes a year being torn down across the country at the height of the market, hundreds of cities like Raleigh, N.C., towns like Ardmore, Pa., and upscale commuter communities like Westport, Conn., have endured bitter political battles over home heights and property setbacks on established lots.

Fred Milani, the Atlanta White House builder, sparked such a standoff in an Atlanta suburb that led to tougher height restrictions. Mr. Fine at the National Trust has seen community concerns shift from anger over the razing of homes – though venerable old Victorians are still tumbling – to "what's going to go up in its place."

Economic and social realities, including the popularity of green technologies, have had one major consequence in the last year. New home construction in older neighborhoods has, on the whole, become more compatible, as both builders and buyers have come to see the value of maintaining what architects call the "historical integrity" of older neighborhoods.

Homeowners value quality over size
In Atlanta's 1920s-era Kirkwood neighborhood, teardown projects in the last year have been cast in the simpler Craftsman style, which have immediately found buyers. Indeed, US builders say their clients increasingly look for quality materials and workmanship rather than sheer size. Some families are even abandoning the one-bedroom-per-child model, builders say, in favor of larger, but fewer, shared rooms.

That aesthetic shift may have affected builders like Mr. Milani as much as the real estate bust.

"There's an awareness now that some of the homes frankly are too big," says Scott Van Duzor, a home builder in Illinois's Fox River Valley. "The McMansion has almost become embarrassing to some people," he says. "They're listening not just to their wallet but their conscience."

Cracking the code to how home buyers

make thier decision.

What do home buyers really want today?

-Nordstrom Service, Disney innovation and K Mart prices,” joked a top Chicago broker speaking to an audience of Real Estate professionals. But all humor aside, predicting how a buyer will receive your product has been an inexact science until recently. Previously, we have all scratched our collective heads over the decisions, priorities and “deal breakers” we have witnessed amongst the common home buyer. Today at the height of our new construction surplus and in light of our specific challenges in enticing a specific target market, dozens of consumer behavior specialists are now developing “scientific” clues into the decision making process in the minds of homebuyers.The science is called psychographics. Psychographics is a market research tool that incorporates people’s backgrounds, lifestyles, beliefs and aspirations to develop discreet portraits of consumer behavior. Psychographics have long been previously developed for products ranging from socks to cars. It is now releasing those same market research tools to assist you – the home builder and developer.

This sample of a psychographic chart is provided by Realtor magazine.

Psychographic

From Wikipedia, the free encyclopedia

Psychographic variables are any attributes relating to personality, values, attitudes, interests, or lifestyles. They are also called IAO variables (for Interests, Attitudes, and Opinions). They can be contrasted with demographic variables (such as age and gender), and behavioral variables (such as usage rate or loyalty).

When a relatively complete assessment of a person or group's psychographic make-up is constructed, this is called a psychographic profile. Psychographic profiles are used in segmentation and advertising.

Some categories of psychographic factors used in market segmentation include:

The highlights of the Housing and Economic Recovery Act of 2008.

In recent months we have been inundated with arguments, both for and against the Housing and Economic Recovery Act of 2008. Recently passed on July 30th, the time of argument ends and a new time begins to fully understanding the bill and what it means to you as an entity whos business it is to sell homes. After all, once the plans have been drawn and the buyer has picked your product, most buyers still need to get financing in order for you to realize your sale.

Rather than describe the entire effects of the bill, here are the bullet points;

As of October 1st, homebuyers must contribute 3.5% of their own money into a purchase transaction if using FHA for financing. The homebuyers may receive the 3.5% as a gift from a family member which can be used for closing costs or down payment. Borrowers may still apply for CHFA assistance in Colorado, providing that the Buyer qualifies under specific income and dependant guidelines - but the catch is that CHFA must work in conjunction with an "approved lender" CHFA is increasingly difficut to navigate. If you are in need of a good source for a purchase loan using a down payment assistance program, contact Community Trust Funding, Inc. Down payment assistance programs such as Nehemiah, Agape and HomeDreams, are potentially gone as a result of this enactment..
The new law uses the power of the federal government to help shore up investor confidence in Fannie Mae and Freddie Mac, which together hold or guarantee about $5 trillion worth of mortgages
Authorizes $300 billion worth of FHA loans to help troubled homeowners work with lenders to refinance into more affordable FHA loans, provided that the borrower qualify under FHA loan underwriting standards and subject to FHA loan limits.
Offers a $7,500.00 tax credit for 1st time home buyers. While admittedly not an “outright credit” it is touted as “an excellent low cost way for the government to help bring qualified buyers into the market”
Provides $4 Billion in Community Development Block grant Funds for communities to purchase and fix up foreclosed homes.

If you have products which fall into FHA loan limit ranges, it would be important for your sales staff to fully understand the down payment and tax credit programs to maximize your potential in pre-qualifying a home buyer and in offering additional incentives to Fist Time Buyers. – Nicole Court.