Housing starts in March rose to the highest level in five years. If developers keep building at that rate, there’d be one million new houses by the end of the year.
So, what are builders building and what kind of homes do consumers want? The granite countertop of the new kitchen is like the leather interior of a new car — a standard, special order must-have.
Kira Sterling, chief marketing officer for Toll Brothers, a custom home builder, says buyers want kitchens that look semi-professional and bathrooms that could rival a spa. “They are spending a lot of money in the kitchen, and in the master bath,” she says.
And since mortgage rates are so low, and Sterling notes, money is “almost free”, she says new home buyers are looking to reward themselves with special features throughout the house. “Like man caves, cathedral ceilings, additional bedrooms and bathrooms.”
Don’t forget the bonus room. Extra space, in your house for… whatever you want.
David Crowe, chief economist for the National Association of Home Builders, says that homes are a little larger than before the recession. “They’re particularly bigger than during the recession,” he says.
Crowe notes that while the average size of a home fell during the recession now it’s picking up again. “But that has more to do with the fact that only those with very good credit ratings and employment histories can purchase right now, can get a mortgage,” he says.
While single-family home construction is up over last year, according to Crowe the rise in housing building is really due to new apartments. Younger workers often don’t have cash for a mortgage and choose to rent instead.
What about those who can afford to buy a brand new home? Susan Wachter, a professor of real estate and finance at Wharton, says there’s a new trend going on — smaller houses in more urban areas. “There’s an actual increase in demand for city living, for being closer to transit, or less commuting,“ she says.
For those buying homes on smaller lots, Wachter says it’s not just proximity to the potential jobs. It’s also because land prices are coming back strong.
Illustration: Reporter Sally Herships’ illustration of what would appear in her own house, if it was only six rooms.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.