Friday, June 15, 2012

Size Matters

Every town or county has a fairly strict building code that determines what you can build. There are always young buyers who want to know if an existing home is “up to code”, which of course it does not have to be.  Code is what you have to be “up to” if you are building new or modifying an existing home.  But codes change so often that it would be impossible to keep an existing home actually “up to” today’s code.

And besides the codes, there are covenants.  Most of the subdivisions I have dealt with over the years have some sort of covenants and usually some by-laws as well.  In the covenants are rules that are stricter than the municipal codes—the original developer generally designed these covenants—maybe 20 to 50 years ago, and more and more, these rules become outdated.  Of course having just come from my 50th high school reunion, I can see the logic behind the old rules and I see the evolution of the new rules as well.  Let me elaborate.

Years ago when we were designing covenants, we assumed that a particular builder may not be the only builder in a sub-division development, and so—in order to create a unified look and protect each buyer’s investment and the value of the development as a whole—certain rules would be made that all the builders would have to follow.  For example, (one of our developments mandated:) no house would be smaller than 2000 square feet.  To keep the neighborhood neat, every house would have a 2 car garage; fences would only be allowed in the “back yard”; every lot would be fully cleared to it’s sidelines so visually the homes would flow together; and every house would have a tile roof to give a “Spanish” look; rules like that.

But that was then, this is now.  Today we are thinking greener, and beginning to see that smaller houses are more efficient in every way; we’re seeing that tile roofs leak and blow off in hurricanes; and that 2-car garages are nice, but people still leave their cars in the driveway or on the street; and regarding fences, well now that we have “invisible fences” maybe they’re not as important to contain the dog as they once were.

The reasons to build big homes were fairly clear, if every house were big, then the neighbor hood would be one of McMansions.  It used to be folks would come into the office and say, “we’re qualified for a $350,000 house, so show us what there is.”  Generally what appealed to them was the biggest house in their price range.  Buyers liked that they lived in a “special” neighborhood, loans were easy to get, and there were many who profited from the ever-bigger houses (banks, municipalities and the housing industry in particular) and today these groups are now facing the outcome.  To wit, the big houses have become hard to buy or sell just now. (Who has 20% to put down?).

Today the average American home is one of the largest in the world (it is four times the international average). When you consider the immediate revenue generated by oversized houses through permits, construction materials, labor, infrastructure development and land costs, as well as the ongoing property taxes, and costs of heating and cooling, remodels, maintenance of roofs and siding and (perhaps most notably) mortgage interest, it’s no wonder the large homes have been so popular with state and corporate groups alike.  But the long-term cost of these policies becomes clear when borrowers are, predictably, unable to make oversized payments on their oversized investments.

Our most appealing neighborhoods are the ones more homogenized, ones allowing residents to walk from home to a coffee shop or some other appealing location.  Clients ask for "downtown" locations (or locations near public transportation) so they can commute to work without having to drive.  Watch for more developments with these owner-friendly concepts in place.

Dane Hahn is a real estate professional practicing in New Hampshire and Florida.  He can be reached at 941-681-0312 or at   

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