Review of Size Of New Homes Starts Shrinking As Builders Battle Housing Slump
By Allison Roberts on Friday, September 28th, 2007 :: 3:55 pmCategory: Online Articles, Reviews
In her article, Size of New Homes Starts Shrinking As Builders Battle Housing Slump, published Sept. 12 in The Wall Street Journal, Kelly Evans explores how homebuilders are adjusting to the declining housing and mortgage industries. Americans are in debt , and the homebuilding industry is responding accordingly.
As a result of the mortgage industry’s plummet, lenders now steer clear of subprime mortgages due to the vast number of foreclosures and loan defaults. As a result, home sales are at a nearly all-time low. Home sales in July were 870,000 units, which is down from 1.3 million in 2005.
It is painfully obvious from the turmoil in subprime lending that people can’t afford the mortgages on the increasingly popular “McMansions” (term coined by Evans.) In response, homebuilders are cutting the square footage of new homes, which makes sense. According to the Census Bureau, the average American home in the 1980s had about 1,500 square feet. Space in homes gradually increased with each new housing division over the last 20 years until it hit a high of nearly 2,250 square feet in 2005.
Today, homebuilders such as KB Home, Centex Corp. and Toll Brothers Inc. are quoted in Evans’ article stating that new homes will be smaller than the popular suburban sprawling homes. The companies are realizing that people cannot afford larger homes and hoping that these smaller homes - which are sometimes only smaller by 200 square feet - will be in reach for buyers.
Homebuilders are hoping to sell more of these homes to make up for the loss of profit they will face.
Read the Article
Author Bio: Allison Roberts is a graduate of the University of North Texas Department of Journalism. She has experience in agency and in freelance public relations. Allison currently writes for Credit Solutions and she is completing an unfinished work of her late grandfather. For more articles by Allison on bankruptcy and bad credit visit Credit Solutions.
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