What a difference a decade makes.
During the opulent `80s, builders concentrated on satisfying moveup buyers who demanded large, sumptuous homes and were unfazed by the steep price tags attached to them
But in the more austere `90s, this market has softened as an uncertain economy and a shaky job market force many buyers to rethink their plans.
By the late `80s, many builders had recognized the need to retool to attract entry-level buyers who had been sitting on the sidelines unable to afford a new home.
To appeal to this segment of the market, many builders began cutting back on the dimensions of existing models and designing a variety of new compact models of single-family homes that ranged from 1,000 to 2,100 square feet.
James Hemphill, president of the Home Builders Association of Greater Chicago, views this attempt to appeal to first-time buyers as both permanent and healthy.
”The entry-level buyer is an essential part of the home-building industry, and if both our industry and the economy as a whole are to remain sound, the cost of entry-level housing must be reduced,” he said.
Hemphill views downsizing as only one part of the complex process that results in affordable housing.
”There are many things that together can put a house out of the reach of a low- and middle-income buyer, such as the cost of land, materials, labor and government requirements that alone account for 30 percent of the cost of the average home,” he said.
”Twenty years ago, a builder could have his new subdivision approved by all governmental agencies in 30 days. Today it takes two years, and that adds tremendously to the cost.”
If the housing industry is to recover from the recession, Hemphill thinks it is essential that entry-level buyers be able to get into the homeownership market.
”If we don`t do all we can to assist these buyers to get on the bottom rung of homeownership and begin to build equity, the market will eventually suffer from a domino effect as homeowners on the higher rungs of that ladder won`t have anyone to sell their homes to,” he said.
Today many Illinois builders are participating in a program to provide affordable financing to first-time buyers. Under this program, which is funded by the Illinois Department of Housing Development, the state offers low-interest, 30-year fixed-rate mortgages to qualified buyers.
This program is in its ninth year, and Roger Morsch, manager of single-family appraisals for the Illinois Housing Authority, is proud that in this time the department has issued $1.4 billion in a variety of tax-exempt bonds to investors that have enabled more than 29,000 low- and middle-income Illinois residents to own their own homes.
Despite the program`s success, Morsch is concerned because it now appears it will disappear on Dec. 31 if Congress fails to authorize the state to sell tax-exempt bonds for the purpose of providing mortgage revenue.
”It needs to be attached to a tax bill, and there is no tax bill up for passage before the Christmas recess,” he said. ”Both our senators favor an extension of this program and the bill has 289 co-sponsors, but at this time I`m not terribly optimistic. It`s unfortunate, because if it ends, it will put a new home out of the reach of thousands of qualified buyers.”
The program puts a cap on both income and the price of a new home, and the cap varies from county to county. For example, in Kendall and Kane Counties a family of two with an income of no more than $47,300 or a family of three or more with an income not exceeding $54,395 is able to finance a new home priced at no more than $157,680 with a 30-year fixed-rate mortgage at 8.55 percent.
(For more information on this first-time buyer financing program, you can call 1-800-942-8439 for a brochure or contact your local bank for the names of builders participating in this program.)
One of the builders in the program is Primus Corp., which is offering six scaled-down designs on 67 lots in the Hamlet, a neighborhood of smaller homes in Seasons Ridge, a 212-acre subdivision in far west surburban Montgomery.
”There`s no doubt that this program will put many people in new homes who would still be renting,” said Joyce Malenaar, director of marketing for Primus.
Models have been built of five of the Hamlet`s six designs. The models, three of them furnished, are expected to open by mid-December. The homes range from 1,026 to 1,776 square feet and from $99,990 to $129,990. They have two or three bedrooms and 1 1/2 to 2 1/2 baths.
Standard features include aluminum siding, two-car attached garage, thermal pane windows, full landscaping and cathedral ceilings. Many are located on cul-de-sacs in a neighborhood that is in a community that will include lakes, tennis courts and jogging paths when it is completed. Homes are also within walking distance of supermarkets and other stores.
Bud Arquilla III, president of Burnside Construction in Glenwood, is another developer who agrees that builders can`t afford to underestimate the importance of first-time buyers.
”During the `80s, the industry ignored their needs and concentrated on upscale buyers, and it has come back to haunt them now that the economy is topsy-turvy,” he said.
”Today it is the white-collar jobs in manufacturing and finance that are being eliminated, while jobs in the service sector are holding steady. This means that upscale buyers who used to live in a house for a few years and then cash in and move up are becoming more cautious. But blue-collar buyers who have more secure jobs are ready to buy, provided they can find a house that fits their budget.”
Burnside is trying to provide that at Country Ridge in Wauconda, a subdivision of 293 single-family homes tailored to first-time buyers, who have a choice of eight ranch and two-story floor plans ranging from 1,250 to 2,278 square feet.
Models offer from two to four bedrooms, 1 1/2 to 2 1/2 baths, attached two-car garage, aluminum siding, wood windows with insulated glass and screens, ceramic foyers and baths.
According to Arquilla, the 314 ranch, with 1,250 square feet and base-priced from $123,900, has been especially popular with buyers.
Among the buyers at Country Ridge are Claire and Al Weber, who purchased a 314 ranch. ”I love my little house. I wouldn`t live in a bigger house for a million dollars,” said Claire Weber.
Claire, who is a nurse, and Al, who is retired, recently sold their large house to their daughter and purchased the ranch.
”This is all the room we need in this time in our lives,” she said.
”And when I do retire, I`ll have better things to do than clean a lot of empty rooms.”
Lexington Homes has reduced the size of many of its models and lots in an attempt to gain a larger share of the first-time buyer market.
After unveiling the Homestead series – three- and four-bedroom, 1/2-bath homes ranging from 1,362 to 1,767 square feet and from $120,000 to $150,000- Lexington followed with the Homestead series, three- and four-bedroom, 2 1/ 2-bath homes with full basements ranging from 1,330 to 2,034 square feet and from $130,000 to $160,000.
Both the Heritage and Homestead homes are aluminum sided and offer four facades: rustic, classic, traditional and Victorian. The Homestead is available in 17 models and elevations, and the Heritage is available in 13 models and elevations.
In Bolingbrook buyers have a chance to compare the models of established builders such as Lexington with those of Lakewood Homes, a new developer that is targeting only first-time buyers.
Lakewood Homes opened its first development, Lakewood Park, a community of 102 single-family homes ranging from 1,520 to 1,947 square feet and from $125,990 to $145,990, in November, 1990.
The subdivision sold out in less than a year, and the firm recently opened a sales trailer for Lakewood Farms, a Bolingbrook development of 191 homes. Buyers can choose from six models ranging from 1,365 to 2,171 square feet and from $115,000 to $139,000.
”Most people spend more time in their family room and kitchen than they do in their formal living room and dining room,” said David Russo, Lakewood`s vice president of sales and marketing. ”So by making these rooms slightly smaller, we`re able to expand the multipurpose rooms where the space is really needed.”
Although these scaled-back homes contain less square feet, both empty-nesters and first-time buyers want to make sure that this ”less” is actually ”more.”
”Today discerning buyers expect the same amenities and architectural refinements in these new homes that they enjoy in their present homes,” said David Hill, president of Kimball-Hill Builders who has introduced the Coventry Junior series of five smaller models of single-family homes ranging from 1,000 to 1,600 square feet in Cobbler`s Crossing in East Elgin.
As a result, today`s smaller homes contain many of the same glitzy amenities found in larger models, plus a few extras that camouflage the small dimensions and provide a feeling of expansiveness.
The dramatic use of glass is one of the most effective tools builders use to expand the walls of a Lilliputian house. Space-stretching wraparound corner windows, stacked windows, fanlights, windows flanking fireplaces, skylights, bays and sliding glass doors that expand the kitchen or family room into a patio are just some of the creative ways glass has been used in smaller homes. Many of these features can be found in Kimball-Hill`s Coventry Junior series at Cobbler`s Crossing. The four models range from 1,275 to 1,970 square feet and from $123,500 to $146,900. All of the models have three bedrooms and aluminum siding, and include carpeting, no-wax tile, light fixtures, stove, dishwasher and disposal.
Three new models, the Sutton, Princeton and Laurelwood, each selling in the low $120,000s, will be available within the next 30 days.
All of these Coventry Junior homes are clustered in an area designated for these smaller models on generous 60-by-120-foot lots. ”Our homes may be smaller but we haven`t stinted on the lot because we feel it`s an attractive incentive to buyers who may want to expand as they begin to build equity,”
said Hill.
Wheaton-based Smykal Associates takes a different marketing approach in their smaller versions of popular models at Brampton Place, a development of 105 single-family homes in Bartlett.
”Buyers can choose one of three smaller models and have it built on a lot of their choice anywhere in the community,” said Peggy Taheri, executive vice president of sales and marketing.
Taheri believes this scattered-site placement of smaller homes gives the entire community a balanced look. ”Buyers are happy to be surrounded by larger and more expensive homes because it raises the value of their own homes,” she said.
Smykal was one of the first builders to recognize the importance of pampering the entry-level buyer. ”We decided to test the waters in the spring of 1991 with just one downsized model at Brampton Place,” said Taheri.
That model was the Dover, a 1,775-square-foot, three-bedroom, 1/2-bath home priced at $159,900. ”It was so popular we had to give it three different front elevations – a farm model, Colonial and Georgian – so we wouldn`t have half a dozen clones on one block,” said Taheri.
Although the facades differ, the basic floor plan for the Dover is the same. Standard features include a full basement, fully sodded lot, attached two-car garage, aluminum siding, air conditioning, prefab fireplace, family room and first-floor laundry.
Today Smykal offers two other downsized models in Charter Oaks, an upscale community of 97 single-family homes that`s also in Bartlett. All three- and four-bedroom homes are brick and cedar-sided.
The models are the 2,100-square-foot, three-bedroom Bradford, priced at $207,400, and the 2,100-square-foot, four-bedroom Woodhaven, priced at $214,000.
