Poll: Not All Florida Home Loan Applicants Want Large Houses
In a housing market sucg as the one we’re currently experiencing, numerous reasons are given for drop offs in Florida home mortgage demand. While issues such as high interest rates and steep price tags are certainly blame, so is another, often overlooked fact:
Houses are simply too big. That’s why they’re so expensive.
A growing number of people want to continue living in newer single-family homes, but want them to be smaller, according to a recent poll conducted by Angie’s List, a word-of-mouth Web site network of 500,000 U.S. homeowners.
This runs counter to reality; homes being built today have never been bigger - the average home now measures 2,434 square feet of living space, according to the National Association of Home Builders - but the Angie’s List poll of 8,000 homeowners shows that 20 percent want them to be downsized.
Among the reasons:
- Sixty-two percent wanted more time for things other than their house.
- Fifty-three percent cited rising utility costs.
- Fifty percent cited empty-nest syndrome.
- Forty-nine percent lamented having unused space.
Angie Hicks, founder and chief marketing officer of Indianapolis-based Angie’s List, says she wouldn’t be surprised if smaller homes started being built. How else will Florida home loan applications continue to rise?”
I’m just afraid that they won’t get any cheaper, though,” Hicks says.
‘Correction needs to be made’
Custom home builder Bill Silliman, part owner of Orlando-based Reiche & Silliman Inc., agrees with Hicks’ assessment and says a number of factors make building smaller and cheaper houses difficult.
“Here in Orange County, for example, there is hardly any land left, and the price of land is through the roof,” says Silliman. “Land and construction costs are the reasons that home builders must build 2,000-square-foot homes or more to make any sort of profit.”
Jack McCabe, chief executive of Deerfield Beach-based McCabe Research and Consulting LLC, says the results of the poll do give an accurate picture of what home buyers are leaning toward. Moreover, he says, the sluggish Florida real estate market could be the key to change.
“The only way smaller and more affordable homes can be built is if land prices start dropping,” McCabe says. “I think strong potential exists that land prices will drop in the next three to five years as construction slows and the market corrects itself from exorbitant land costs.”
McCabe says there is no doubt that there is a demand for smaller homes other than apartments and condos. Those looking for a Florida mortgage loan may hold out until these are built.
“Not all baby boomers are rich, and many are looking for housing that falls in line with their pensions,” McCabe says. “The downward trend in sales and construction will be great because we are so out of whack price-wise, that a correction needs to be made.”
