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New Homes Getting Smaller

4/24/2009

In a reversal of the McMansion trend of years past, new homes are being built with less square footage but make up for it with smart design. 

 

Home buyers are finding that they would prefer to spend their housing budget on quality products and features, rather than sacrificing that quality for more space, said Kenny Elliott of Re/Max Real Estate Partners.  This sentiment was mirrored in the 2007-2008 Consumer Preferences Survey conducted by the National Association of Home Builders (NAHB) in which 58 percent of respondents answered that they would prefer a smaller house with high-end amenities rather than a larger home with fewer amenities.

 

In 2008, this was reflected in average home sizes that went from 2,629 square feet in the second quarter down to 2,373 square feet in the fourth quarter. Going forward, eighty-eight percent of builders have expressed their plans to build smaller houses than in the past, according to data provided by NAHBs economics and housing policy group.

 

This new trend has been attributed to several factors.  Baby boomers are becoming empty-nesters and are looking to downsize from the large house they previously needed to accommodate their family.  The recent recession has also caused people to tighten their belts and make financial decisions that are reasonable for their economic situations.  Home buyers are also becoming more environmentally aware and are looking for ways to leave less of a footprint on the planet.

 

Whatever the reason, home builders are adapting to the needs of their consumers. Because builders are expected to deliver the same quality product in a smaller package, its forcing them to be creative in how they design the layout of the house so that the home owner feels comfortable and sees their home as the perfect fit for them, said Kenny Elliott.

 

Some ways in which builders are addressing this challenge are by increasing the ceiling height, installing skylights and adding more windows, and incorporating an open floor plan that makes the home appear larger and more spacious.

 

It is also important for builders and home buyers to sit down and do a serious evaluation of what features are most important to their lifestyle wants and needs.  The builder can then design the floor plan to accommodate these requirements so that the home owner has the space that they need, rather than more space than is necessary.

 

Whether or not this trend is here to stay will only be determined over time.  To find a builder in your area to help you create the home of your dreams no matter what size, contact your local home builders association at sthba.org or visit www.nahb.org/forconsumers.

 

Q&A on $8,000 First-Time Home Buyer Tax Credit

4/19/2009
Q: Who is eligible to use the tax credit?

A: The $8,000 tax credit is available for first-time home buyers only. The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. All U.S. citizens who file taxes are eligible to participate in the program.


Q: Are there any payback provisions?


A:
The tax credit is a true credit. It does not have to be repaid. The only repayment requirement is if the home owner sold the home within three years after the purchase.


Q:
Are there income limits to qualify for the credit?

A: Home buyers who file as single or head-of-household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $75,000. For married couples filing a joint return, the income limit doubles to $150,000.

Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit. Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.

The credit is not available for single taxpayers whose MAGI is greater than $95,000 and married couples with a MAGI that exceeds $170,000.


Q: What are the effective dates for the tax credit?

A: First-time home buyers would receive an $8,000 tax credit for the purchase of any home on or after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on the sale of the home during this period.


Q: Is the tax credit refundable?

A:
Yes. A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference. For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $3,000 payment from the government.

If you are due to receive a $1,000 tax refund from the government, your refund would grow to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).


Q: What years can buyers apply the tax credit to their tax returns?

A:
Buyers can take the tax credit on their 2008 or 2009 income tax return.


Q:
What types of homes qualify for the tax credit?

A:
All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a principal residence in the prior three years. This also includes newly-constructed homes.


Q:
Where can I find more details on the tax credit?

A:
NAHB has a consumer Web site that provides comprehensive information on the tax credit. The Web site is www.federalhousingtaxcredit.com
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