Basic Features Appeal to First-Time Buyers
First-time homebuyers are forcing home builders to think frugal by penny-pinching on upgrades.
Nearly 50 percent of new homes sold in the first six months of 2009 cost less than $200,000, the largest share for the first six months of a year in five years. The average size of new homes fell to 2,065 square feet, the smallest since 2000.
“The high end isn’t moving, so builders have to dumb-down their designs and put in Formica kitchens and the bare-bones carpeting,” says Brian Bethune, an economist at IHS Global Insight.
The barebones approach is helping builders that focus on first-time buyers improve their profits. Standard Pacific Corp. has more than doubled its stock price and Meritage Homes Corp. is up 84 percent.
Source: Bloomberg, Kathleen M. Howley and Daniel Taub (08/06/2009)
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