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New Homes Are Being Built Smaller

by Pistol Tingen

According to the National Association of Home Builders, for the first time in at least a decade, builders are substantially reducing the size of new houses.

"We're trending toward smaller homes," says Gopal Ahualia, director of research for the National Association of Home Builders.  He says growth in the average size of new single-family homes, which went from 1,750 square feet in 1978 to 2,479 in 2007, is starting to reverse.

His analysis of Census data shows that homes started in the third quarter of 2008 averaged 2,438 square feet, down from 2,629 square feet in the second quarter. Ahluwalia, who began the quarterly analysis in 1999, says there have been slight dips before, but the latest drop was much steeper and is likely to hold even after the economy recovers.

In a survey of builders this month, his group found that 89% are building or planning smaller homes than they had been.

Kermit Baker, chief economist of the American Institute of Architects (AIA), also sees the shift toward smaller houses.   He says it was obvious with high-end buyers even before the economic downturn and he expects it to continue with them.

"Affordability is a major problem," Ahluwalia says, and building smaller usually means cheaper.  Also, he says, people are realizing as household size shrinks that they don't need big homes.

Baker says there is less incentive to buy a bigger, more expensive home as the economy weakens, home prices fall and energy costs remain a concern.  He says people are less likely to see a home as a good investment.

Even high-end buyers, Baker says, are showing more interest in smaller, better-crafted homes.

"People don't want to be wasteful," says JD Callander of Weichert Realtors.  She says they are concerned about utility costs and cleaning requirements.

Clients used to like the status of a big home, she says, but "those days are gone."

Large or small , new or existing-- when you're looking for a home in the Greenville, NC or Pitt County area, please contact The Pistol Tingen Team at 252-321-6161 for all your real estate needs.

 

U.S. Government to the Mortgage Rescue?

by Pistol Tingen

 

Before the weekend comes to a close, both FannieMae and FreddieMac may lose control to the United States Treasury Department.   Steven Adamske, spokesman for House Financial Services, stated, “We are waiting to see what the details are”.

Both FannieMae and FreddieMac currently buy and package mortgages for other investors, and together hold or guarantee $5 trillion in housing debt—a figure that represents nearly half of the nation’s total.  The financial health of these two mortgage giants is critical to the housing market.

FreddieMac and FannieMae  are chartered by the government but are shareholder owned—funded solely with private capital raised from investors on Wall Street and around the world. Without question, they are the nation’s main source of liquidity for home loans.  At the present time, neither mortgage company appears to be in imminent danger of failure.

The plan under consideration could place Freddie and Fannie under federal control, and could include steps to dilute common stock while sheltering the agencies from financial losses. 

Federal intervention could serve as a partial remedy to help correct the slumping housing market by easing fears about the solvency of FreddieMac and FannieMae.  Both Freddie and Fannie could then obtain funding easier, which could lead to lower interest rates on mortgages and provide a jolt to the housing market.

Mark Zandi, chief economist and co-founder of Moody’s Economy.com, commented, “It’s a bold move and it certainly has big plusses.  Mortgages rates would lower and more credit would be available.  Stepping in like this will be a big shot in the arm to the stock market and bond market.  It’s a very positive step.”.

Certainly these are some changing times in the entire real estate market.  Throughout the fluid housing market of Greenville, NC – Pitt County, The Pistol Tingen Team continues to offer unwavering, professional real estate service to the community. Whether buying or selling, please contact us (252) 321-6161 for all your real estate needs.

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