Housing Trends: Go Big AND Go Home!

This week an article was published in the New York Times business section highlighting a growing trend in home buying.  Entitled “Big is Back,” the piece describes a phenomenon where bigger prices, bigger sizes, and bigger luxuries are fueling our hot housing market.  Despite the recession and slow recovery the country experienced over the last few years, the American appetite for bigger (and better) homes appears to be back, full steam ahead.

The story profiles several couples who opted for new construction with all its expected desirable amenities, and then still chose to substantially upgrade the properties with even more bells and whistles.   Extras such as media rooms, sun rooms, automated lighting/temp/sound system controls, home offices with custom built-ins, extravagantly finished basements with gyms, two master bedroom suites, and more luxurious finishes….. push the homes well above the builder asking price.  And in many cases, the options also increased the home’s square footage and occasionally its intended footprint.

Back in 2008,  we all know the market for large expensive homes took a sharp dip due to the recession.  In fact, in July 2008 the National Association of Realtors noted that the number of homes sold between $750,000 to $1 million dropped by 35.5% from the previous year.  Well, it’s 2014 and the situation has definitely rebounded.  Compare last July 2013 to that of July 2012 and sales of homes costing more than $1 million were up 46.6% !

In our experience, the NY Times piece rings true.  We ‘re seeing our new construction listings range in size from 4,000 SF to well over 5,500 SF.   Large gourmet kitchens with professional style appliances and master suite retreats, finished 3rd floors or basements, and mudrooms are at minimum basic expectations for our higher end buyers.  We’re seeing upgrades on these new homes result in price increases from 3%-5% of the original sales price.   Items like hardwood floors, additional built-ins and radiant heat are some of the most common requests builders are happy to meet.

While all this is certainly fantastic from one perspective, the NY Times noted that at the same time the lower end of the market is stalled.  As we’ve blogged about recently, low inventories are boosting prices and recent legislation has simultaneously tightened lending requirements.  Finding that first home is now an even tougher nut to crack for many first time home buyers.  Saving for a down payment and qualifying for a mortgage has become a challenge for young adults out of college who are often burdened with student loan debt.  It’s a difficult set of circumstances.  The buyers who are fueling the “bigger is better” trend are those with high incomes and strong credit who held onto their properties through the recession and can now take advantage of the improving resale market.  They are making their move now and they are moving up!

As always, stay tuned to our blog see where the real estate market moves!

For information about selling or buying a home, please contact Mendosa-Balboni & Associates at www.mendosabalboni.com.  978-341-5400