In 1973, the average home was 1,660 square feet. By the second quarter of 2008, the average home had reached an all-time high of 2629 square feet. (US Census Bureau) Now, the trend is headed the other way, dramatically. By the end of 2008, the average home had dropped to 2343 square feet.
Builders are having successes with smaller floor plans that are well planned out , and make wise use of space within the floor plan. KB Home has seen growth in their small footprint product, "The Open Series". Jeffrey Mezger, president and chief executive officer of KB Home is quoted: "With The Open Series, we are going beyond offering our buyers choices on design elements such as flooring and counter tops to giving them a say in the floor plan layout itself. The result is a line of beautiful, functional homes that give buyers exactly what they want and can afford in a new home, and nothing they do not need." KB Homes has seen a 26% increase in ordered homes.
Builders are having successes with smaller floor plans that are well planned out , and make wise use of space within the floor plan. KB Home has seen growth in their small footprint product, "The Open Series". Jeffrey Mezger, president and chief executive officer of KB Home is quoted: "With The Open Series, we are going beyond offering our buyers choices on design elements such as flooring and counter tops to giving them a say in the floor plan layout itself. The result is a line of beautiful, functional homes that give buyers exactly what they want and can afford in a new home, and nothing they do not need." KB Homes has seen a 26% increase in ordered homes.
The economy is an obvious influence, as we see consumers making trade-offs, and "doing more with less" A social movement can also be seen, as we all remind ourselves and each other to slow down and simplify life. Bert and John Jacobs founded Life is Good, a Boston-based apparel company that last year had sales of $120 million (Financial Times) The product line promotes an appreciation for the small pleasures of life.
The "Small House Movement" and "Small House Society" are also gaining membership and momentum, though some members take things to the extreme. Greg Johnson, of Iowa City Iowa, is considered by some to be a founder of the movement - he lives in a home of 140 square feet.
Sarah Susankah's "Not So Big House" book, now 10 years old, remains as relevant to new construction as it does to remodels.
Sarah Susankah
What does this tell us as we work to offer the new home consumer the options they want, in the footprint they need (and can also afford)? A smaller home stripped of options to gain 'price point' entry may not stand out in the marketplace from another builder's product (or even from a "home on wheels' as they like to say in the South). Consider choosing differentiating options that add value (both appraised value and perceived value) without driving a great deal of incremental cost into the product.
Last week on a sales recap call, I heard a report of a small builder who had contracted a installing distributor to add fireplaces into his standing inventory of 14 constructed homes. The homes were standing still on the market, and the builder realized that a fireplace would be the emotional touch point that would differentiate his product.
Last week on a sales recap call, I heard a report of a small builder who had contracted a installing distributor to add fireplaces into his standing inventory of 14 constructed homes. The homes were standing still on the market, and the builder realized that a fireplace would be the emotional touch point that would differentiate his product.
Heat & Glo's Cosmo Slim Line Fireplace
With the shift in smaller footprint, each addition needs to be thought out in terms of the space it takes in the home, the cost it adds to the home, and the value it implies to the consumer. All of these need to line up when the appraiser walks the home. (Here is my opportunity to let you know that adding a fireplace adds up 6 to 12% in home value - National Association of Realtors)
Regarding the floor space versus impact discussion, a contemporary linear fireplace can create instant emotional and design appeal, add value to the home, AND take no floorspace at all!
Cost is of course very relevant to the homes you build, and purchasing teams are working harder than ever. Consider stepping away from the core cost of the product, and looking at overall lower installed cost. In addition, work with your installing suppliers, they will be able to consider aspects of the product install that will save you additional level. For example, at Hearth and Home, we are currently working with several National builders to value engineer the placement of fireplaces in the home plan. By moving a fireplace even a few feet, it is possible to save a great deal on vent pipe and installation. Still offering a product the consumer desires, differentiating from those 'stripped down' homes on the market, and working together with your manufacturers and installation teams to get the best value.
When choosing options for your smaller footprint plans, consider:
ROI (Return on Investment)
ROE (Return on Enjoyment for the home buyer)
Differentiating your Product
and lastly
Cost (Total installed cost, after value engineering all aspects of adding the option)
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Krisann Parker-Brown is the merchandising manager for Hearth and Home Technologies, the leading manufacturer and retailer of fireplaces and hearth systems.
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Krisann Parker-Brown is the merchandising manager for Hearth and Home Technologies, the leading manufacturer and retailer of fireplaces and hearth systems.
Krisann supports design centers and new construction builders in presenting Heat & Glo, Heatilator and Quadra-Fire hearth systems, and consulting on design center merchandising, point of sale and the consumer experience.
Krisann is a member of the Retail Design Institute. Contact her at brownkr@hearthnhome.com or 952-985-6537.
Twitter http://twitter.com/kparkerbrown
