Downsize, But Make it Special!
Homeowners say "Downsize Me!"
NEW YORK (Reuters) - Americans are carrying a lot of excess weight and desperately want to slim down. No, not their waistlines -- in the size of their homes.
"Steeply deteriorating." "Hard landing." "Kaput." These are some of the terms used by analysts to describe the slowing of the U.S. housing market. And with the glory days of home-price appreciation now over, some homeowners are declaring, "Downsize Me!"
A huge gap between the supply of homes for sale and demand for housing means prices are leveling off -- and could tumble. David Horwitz and his wife, Diane, are the type of homeowners looking to streamline their expenses and unload their roomy homes for more humbler abodes.
The Horwitzes, both semi-retired, just moved into a 1,200 square-foot apartment on the Upper East Side of Manhattan after living in a 2,200 square-foot home in Scarsdale, New York.
"Our property taxes went down by 1,000 percent, the ConEd (bill) was cut by two-thirds and the cost of home maintenance was reduced by at least 50 percent," said David Horwitz. "No gardener, no roofer cleaning gutters, no tree spraying, no snow removal, no exterior painting every six or seven years."
The Horwitzes, who have no mortgage, plan to reside in the apartment for a while, so even if prices fall it is of little significance to them.
Mike Wright and Lin Drury are also enjoying the city life.
Halstead Property, a Manhattan real-estate firm, recently sold the couple a 900 square-foot co-op in the Inwood Hills area of Manhattan. Their new place is smaller than the 1,100 square-foot townhouse they called home in Ossining, New York. A writer by profession, he said his motivation for moving to Manhattan was not just to downsize, but to be closer to his wife's job as an associate professor of nursing at Pace University, New York City and Westchester.
TIMING THE MARKET
Sometimes, though, buyers need to pay up to scale down.
The Wrights' downsizing was their second in two years. Prior to their Ossining home, they enjoyed a 2,200 square-foot condo four blocks from legendary Wrigley Field in Chicago.
"We realized prices would be higher in New York than in Chicago," Mike Wright said. "We didn't expect to get a smaller home while spending about one third more. If we'd bought, say, five years earlier, the price might have been less."
Diane Ramirez, president of Halstead Property, has seen downsizing pick up steam in recent months, especially among suburbanites in New York, New Jersey and Connecticut. "Homeowners are probably sensing now may be the right time to get the best price before the market cools further," Ramirez said. "Some of these homebuyers are empty-nesters now finding their homes are larger than what they need and more than they can handle."
In Florida, which saw double-digit home-price gains in the past few years, homebuyers appear more interested in perks. In fact, in the Sunshine State -- long-known as a downsize destination for retirees -- homebuyers are losing interest in size altogether. "People are at the point where they would rather have a luxurious interior than expand," said Budge Huskey, president and chief operating officer at Coldwell Banker Residential Real Estate in Sarasota, Florida. Potential buyers want kitchens designed for entertaining, state-of-the-art appliances, media rooms and home theaters, he said.
"Many of these people have downsized already, and now they want a more luxurious home," he said. "They are more interested in a Jacuzzi than another bedroom."
Gopal Ahluwalia, vice president of research at the National Association of Home Builders, a trade group in Washington D.C., said feedback from consumers and builders indicates the average size of a U.S. home is flattening out.
The average home size went from 1,500 square feet in 1970 to more than 2,400 square feet in 2005. During the same period, the average household size declined, from 3.11 to 2.59, he said.
"Ten years back, most people wanted more space -- now they want more features," Ahluwalia said. "If you look at 35 years of history, from 1970 to 2005, and even early 2006, home size has been continuously rising, except during periods of housing recession."
TAKE MY HOME, PLEASE!
In any event, packing up a house full of belongings -- which could be decades worth of stuff -- and transferring them to another home is a daunting and dreaded task.
A wealthy couple in one of New York City's toniest Fifth Avenue cooperative apartments came up with an unusual solution: They sold two rooms, or about 650 square feet, of their 3,400 square-foot apartment.
Edward F. Johnston III, vice president and director at Brown Harris Stevens, a Manhattan-based real estate firm that specializes in high-end property, advised the couple.
"It was a large space for just the two of them -- they never used the dining room," he said.
"Most high-end luxury buyers are not influenced by a cooling market, but if you own an apartment you always want to sell at the right time."
"They already had one of the biggest apartments on a high floor in one of the top buildings on Fifth Avenue," he said. "Did they really need 9.5 rooms as well?"
Copyright 2006 Reuters