Makes sense, I know there's floor plans out there they could build on smaller lot sizes. My wife's old house was a 2 story 1500 Sq ft home with an alley/garage entry.


They may not be as profitable when you run the numbers based on Sq ft, cost of land..etc But smaller houses have gone up significantly more than larger houses as a % of price increase.


Seems like you could build that % increase into the sales price and make up margins because the market has already told us thr buyers are there and willing to pay extra


Seems like builders are missing an opportunity here

Maybe with electricity prices doubling/tripling people will wonder how necessary it is to cool that 4,000 sq ft house they needed....

I'm hoping they go Pebble Creek style with an HOA. No renters allowed

There are a number of builders that have product in the 1500-1800 sf range on 40 foot lots. Even the production builders in that range are at $300/sf if you are talking austin berbs. Problem is, all the city planners and/or p$z/council want bigger lots as much as possible. Leander is wanting acre lots instead of production lots on a project. Those will all be 1.5mm homes in this market. Gtown wants some 80-foot lots. That's going to be close to million $ homes. Way to look at for the people making $85k/yr like everyone claims.

For a few reasons probably not. 1. Cities hate small lots. A lot of times you can get a mix, but they greatly dislike 40' lots. 2. Dirt is expensive. The economics have to be there, and in the more infill locations small houses don't get it there.

That said if you get tertiary enough you can find homes at a lower price point. Horton is advertising 1,336-2,532sf homes starting at $272,490 in at Wildcat Ranch in Crandall.

Diggity said:

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people say that want to downsize, but they really don't. builders build what the market wants/supports.

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Yup. I've seen two major routes for empty nester home buying (if they ever decide to leave their house currently).

-Home has to have all the amenities and host all the kids, spouses, and grandkids at once. Most likely near the most settled kid.
Or
-Its a 3/2 in a retirement community

Everyone we know who opted for lakehouse full time did so once their kids were in college, not once they had grandkids.

If builders built what the market wants then why the sharper price increases over the last several years for what was <200K, which got chased into <300K and are now <400K.


The bigger houses didn't move that much as a percent of sales price

I don't have any numbers on appreciation by price point, but my assumption would be this:

the expensive areas of a home are things like slab, roof, bathrooms and kitchens and are required no matter the size. Keeping finishes constant, costs for these items don't rise $ for $ as the home gets larger. It's also cheaper to build space over two stories rather than one. As homes get larger, the extra space is usually bedroom and living spaces, which are relatively cheap to build (this is why builders love throwing in huge game rooms and media rooms). It's also why, when comparing homes, appraisers don't adjust additional square footage at the same rate as the rest of the house.

What you're seeing in "entry level" homes now is a function of price for land and materials rising as demand grows, so the floor is increasing.

The alternative to my original statement is that builders don't care about what the market wants and/or can support, which wouldn't make logical sense.

I agree with all that, bigger homes get cheaper per square foot for those reasons and because land is diluted by the Sq ft



But I'm talking already build homes where all that was taken into consideration long ago.

But pricing on a 200K house from 4 years ago has escalated as a percent of 200K much more than the price of a 400K house



Only reason I'm aware is I've been checking home prices a lot during these last 6 or so years because I've bought twice, , wifes house sold, plus my parents bought plus I was condering buying a 3rd time as a rental

I guess I don't understand your question then.

If we're talking about builders, what does existing inventory have to do with the discussion? It's no longer in their hands.

Diggity said:

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I guess I don't understand your question then.

If we're talking about builders, what does existing inventory have to do with the discussion? It's no longer in their hands.

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I mentioned above, existing inventory proves demand is there from what I've seen, and at a premium price point from how those homes were priced out when originally build.

if I understand your question, you're asking why builders don't build brand new sub 2,000 sqft homes, when older homes like those sell on the resale market?

Diggity said:

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if I understand your question, you're asking why builders don't build brand new sub 2,000 sqft homes, when older homes like those sell on the resale market?

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When older homes like those have prices going up as a percent more than bigger homes.

I think it's a similar argument to why there isn't more affordable rental housing.

When land and materials costs go up, you need to build a larger home to absorb those costs.

Back when you could buy relatively cheap land and build for $50-75/sqft, you could make those numbers pencil better.

jamey said:

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Diggity said:

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I guess I don't understand your question then.

If we're talking about builders, what does existing inventory have to do with the discussion? It's no longer in their hands.

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I mentioned above, existing inventory proves demand is there from what I've seen, and at a premium price point from how those homes were priced out when originally build.

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But sales on new inventory proves they're moving. I don't do residential real estate, but if you priced a house at $250,000 in somewhere like Frisco you might legitimately have 200 offers in one day. New build or not. The problem is that in those areas you can't get land cheap enough for that price point.

Those size houses are out there, but you won't find them in the large master planned communities.

I just wish builders would build modern, mid century, contemplate style homes that cost less than $3MM.

Traditional is just so boring.

Take a look at mid century modern builder in ctx. We fell in love with their design a couple years ago before they got hugely popular. Wish I would have pulled the trigger then

If demand is the same, wouldnt you rather make 30% of $400k rather than $250k?
Also, where I live it costs around $25k in permits/fees/etc. when you build a residential home. Having a larger home and square footage is going to absorb that cost a lot quicker.

Ol_Ag_02 said:

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I just wish builders would build modern, mid century, contemplate style homes that cost less than $3MM.

Traditional is just so boring.

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Over here in Charleston I've had to do it myself. It's taken years to redo parts like the kitchen and master bedroom and bathroom area. But in the end if you want MCM or now modern, at least over here it's the kind of thing you have to do on your own.

TXTransplant said:

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There is also missed opportunity for smaller homes but with upgraded finishes. Too often these 2k sq ft homes and smaller are finished out like cheap apartments. There are a lot of people who want to downsize but don't want cheap appliances, fiberglass shower inserts, and carpet. But trying to find that is like looking for a unicorn. And with material prices the way they are, builders are cutting corners anyway they can.

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not so much cutting corners.

more so: upgrading the kitchen and bathrooms to luxury level puts the cost per sq/ ft of the house at a price point WAY too expensive

jamey said:

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Will they ever build ~1,500 Sq ft houses in Tx again?

Almost all developments nowdays are 2500 Sq ft or larger, shotgun 2 story houses being the most common.

As I understand it part of the reason they went with small lot, 2 story houses was there's simply more profit with the land cost being diluted by the extra Sq
feet.

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It's a function of how people live. Most folks work an office job or for someone and come home to their home. They spend a lot of time INSIDE of it. As a contrast, we live on a working ranch. We are a family of four and live in the original house that is currently 2700 square feet but about 1000 square feet is storage. Kitchen is small, rooms have no closets, and we live in it just fine and are quite happy with it. We also spend most of our time outside. It's for eating, relaxing and sleeping. It need not be large.

If I were to build my own brand new house, I'd keep it at four bedrooms and three baths and make it no bigger than 2000-2400 square feet and it would be a ranch style house with a gable roof and porches along front and back and it would have a single roof penetration aside from the chimney. This is, in my experience, the best size and shape for efficiency and low maintenance.

Much of my business is roofing 6,000 square foot homes with 30 facets on a roof that are everything from 7/12 to 12/12 pitches. Architects are great for my business and pricing but they aren't so great from a practical and engineering standpoint. But people wants all this architectural stuff and this is what we get.

I should get up on the roof and take pictures of just how screwed up the lack of coherent design is before the worst parts get removed entirely in a week or two (I'm talking rafters + ceiling joists removed). 3,300 sq ft living space on one floor + 850 sq ft garage. It was added on to three times in three different decades and it's a great big mess of valleys done wrong, abandoned penetrations, and a flat area. Every spring it's been time to go up and put a bunch of roofing tar on the problem areas and cross my fingers they'll behave that year.

The new design will get rid of several penetrations, the flat area, low slope spots becoming bigger slopes, and a chimney cricket that's been a big problem child. It'll cost a little bit but the architect and I were able to make the place a whole lot more functional.

Are you adding a cricket or getting rid of it? I don't recommend removing it.

Penetration removals are easy once I get the roof stripped. I see some weird stuff from NEW builds. I've done reroofs due to hail and when I get the roof off, there are 6 air hawks but 8 holes. They don't deck them or anything. They just tar paper over and slap a shingle on it. It's not the way to do it but it'll hold up long enough for the home warranty to run out.

Low slopes aren't a problem if you roof them right. I'm doing one next week in Lakehills for an older couple. It's a 3/12 pitch and some jack roofer came in and caulks the freakin shingles. I got it approved under insurance for replacement so I'm going to ice and water the entire low slope like it should have been the first time. I'm going to eat the cost but these people deserve it to be done right and it's not enough cost to justify asking for it to be paid. Just gonna fix it.

When you reroof, if you have anything LESS THAN 4/12, I would ice and water. You can double felt it with synthetic but if you can swing it, synthetic water membrane is a superior fix. Anything 4/12 or steeper doesn't require it.