Greenspan made a mess of the housing market

Discussion in 'Economics' started by Kaps, May 11, 2005.

  1. Kaps


    Cant believe here in Jersey the way homebuilders raise prices within 10 days for a 1500 square foot townhouse - price are up 30 K - to 429 K - within 1 yr the price is up 90K.

    If ppl complain about 3 cents spike in the gas prices that would change their shopping habits and cause inflation - what is the above ... letting normal working ppl getting squeezed out.

    The RATES have to go up - Greenspan the cause of all Misery........
  2. Retired


    Space embrace

    Buyers' affection for huge homes being fueled by Inland developers

    By LESLIE BERKMAN / The Press-Enterprise

    Super-sizing no longer is confined to fast food, TVs or SUVs. Throughout the Inland Empire, subdivision signs promising estate-size houses, many with floor plans that exceed 4,000 square feet, beckon home buyers.

    Families that a generation ago were content with three bedrooms and a bath or two now are seeking homes with five or more bedrooms.

    "This is my dream," said Linda Morgan, a single mother with two children who is buying a 3,200-square-foot house under construction in Eastvale for $505,000. The house is twice the size of her old home in Ontario.

    The 41-year-old real estate agent and computer specialist said it will be her second move up since she bought a condo five years ago.

    Morgan's house will have five bedrooms and a loft. One bedroom will be a playroom where her 10-year-old son and 14-year-old daughter can watch TV and play computer games. Another will become Morgan's home office. She is reserving a giant bedroom suite on the ground floor for her parents when they are ready to retire.

    "I'm crazy. What am I doing?" she exclaimed half jokingly, contemplating monthly payments that will be about $500 higher, including higher property taxes, and the extra housework.

    The region's exceptionally long run-up in home equity, bolstered by low-interest rates and creative lending programs, is helping buyers afford giant houses with features like home theaters, four-car garages and courtyards.

    Design features that were considered cutting edge in million-dollar homes just three to four years ago now are offered in subdivisions as far inland as Yucaipa, Calimesa and Banning, said Robert Tuffnell, director of design and development for Knitter & Associates, a Newport Beach-based architectural firm.

    "The buyers are chasing these trophy homes," said Steve Johnson, director of MetroStudy, a Riverside real estate consulting firm.

    Pushing Up the Average

    Houses are being built bigger every year in response to consumer preference, said Russ Valone, chief executive of Marketpointe Realty Advisors. Valone said the average size of a new house sold in western Riverside County expanded from just more than 2,000 square feet to 2,800 square feet between 1997 and the first quarter of 2005.

    An average of 11 homes as large as 4,000 square feet sold annually between 1996 and 1998 in western Riverside County, Valone said. Last year, the total was 606. In first quarter of 2005, they were selling at a rate that could push the total to almost 900 this year.

    Buyers say they're trading up to make room for elderly parents, accommodate big-screen TVs and home offices, or prepare for the probability that their grown children will stay with them longer because of rising housing costs.

    Petra Foster said a seven-bedroom house she once considered very large seemed to shrink after her family moved in to it.

    Three years ago, she and her husband, Ron, both 58, bought the 4,000-square-foot, two-story house in the emerging Eastvale community west of Interstate 15 where dairylands are giving way to bumper crops of big-home subdivisions.

    The Fosters have five adult children, and three still live at home. Two sons stay home while attending Riverside Community College, and the girlfriend of one son is a houseguest. In addition, a 30-year-old daughter and her two dogs occupy one of the house's three suites, until she can pay off her student loans. Yet another bedroom is being used by a young family friend who, until recently, was out of work.

    There also is a living room, family room, large kitchen, sewing room and the parents' bedroom suite that is spacious enough to hold Petra's quilting machine. Petra makes artful quilts that hang in the entryway and in the formal dining room dominated by a large table for family gatherings.

    Not all families moving into big houses are large. Petra's married daughter, Erin Lawrence, and son-in-law, Kevin, live next door with their 3-year-old daughter in a seven-bedroom home. Erin Lawrence said they bought the house because they had the money and fell in love with it.

    "I always wanted a castle," she said.

    To keep up with the housework, Lawrence said, "We pay the Merry Maids."

    And after getting a $600 electric bill one month during their first summer in the house, she said they got an automated system to control the air conditioning.

    Selling Fast

    Part of the growing popularity of big houses has to do with economics. Developers explain that as land prices rise, they are obliged to put a larger house on a lot so the price per square foot is palatable to potential buyers.

    "The trend now is the yards are getting smaller and the houses are getting bigger," said David Hahn, Inland Empire division president for Centex Homes.

    Randall Lewis, developer of the Preserve master development in Chino, said in all of the community's subdivisions, the largest floor plan has been the fastest seller. It only makes sense, Lewis added, noting, "Living area is the one amenity you can't buy later at a home improvement store."

    Lee Trevino, 33, said his family of five is cramped in their 1,200-square-foot Norco home.

    Trevino, who runs a plastering business from his home, said he and his wife, a teacher who needs a place to grade papers, fight over who gets to work on the kitchen table.

    Then there is the problem he has fitting his 42-inch plasma TV into their bedroom.

    "I act like I have this big house and buy everything big," he admitted.

    Trevino says there also isn't enough closet space.

    "If I put a shirt in her closet, she throws a fit," he said.

    Now that the family has made a $200,000 profit on an investment property and seen their own home's value skyrocket, Trevino said it is time to move up. He said they would jump directly to a house that is 3,000 square feet or bigger.

    "You buy something smaller and you will outgrow it," he said.

    Big Investment

    Many move-up buyers cling to the belief that real estate can make them wealthier and is worth taking on a larger mortgage.

    "I think real estate is the most secure investment right now," said Joaquin Aguilar, a 36-year-old truck driver. "Even if it drops off for a while, in the long run we will end up on top."

    Aguilar said he and his wife, Kimberly, a saleswoman, are moving with their three children from a 1,700-square-foot house in Corona to a 3,970-square-foot house they bought in Eastvale for $620,000. Aguilar said in the home, all the children will have their own bedrooms. He said the family also will have a room for a home theater, a game room, a children's video game room and a room for the exercise equipment Aguilar kept in the garage of his old house.

    Buying Inland

    Builders of large homes in the Inland Empire say many of their buyers come from the higher priced Los Angeles and Orange counties in search of more for their money. They say others cruising the model homes are Inland families who have seen their homes wildly appreciate and want to move up to something bigger and newer.

    Michael and Elisa Douglass, who had stopped last Sunday to check out a Centex Homes' subdivision in Eastvale, said they intend to sell their 50-year-old house in Rosemead, using some of the proceeds to pay off debts and the rest to buy a 3,800-square-foot house in Eastvale without increasing their mortgage payments.

    Alfonso and Maria Guerra, both postal workers, said they have a combined annual income of about $100,000 and were able to consider buying a house of about 4,000 square feet in Eastvale, because the house they bought in Corona for $170,000 in 1995 now is worth about $550,000.

    "This is the wife's idea," said Guerra. Still, he said he agreed with his wife that, with four children, they could use a sixth bedroom for the live-in baby sitter. They also would like a house better designed for entertaining.

    Extended Families

    Buyers of the large houses in Eastvale and adjoining Mira Loma include many of Vietnamese, Indian, Hispanic and Middle Eastern backgrounds.

    Alice Cummings, senior vice president for Brehm Realty, the sales arm of Brehm Communities, said the ethnicity of buyers is amazingly diverse in the company's Township Place subdivisions in Mira Loma, where houses priced up to $620,000 offer the possibility of up to eight bedrooms.

    Cummings said some buyers who appear to be immigrants are extended families. It is not unusual, she said, for uncles and aunts to plan to live in the house and share the cost.

    Also, Leslie Young, a agent with Riverside-based Van Daele Communities, said the boomer generation's wish to have aging parents move in with them has increased the popularity of large, ground-floor bedroom suites with sitting rooms, bathrooms and walk-in closets.