August 10, 2014
By: Anthony Panissidi
ASBURY PARK, N.J. — Joe D’Arpa’s new home will house him and only him, but its size makes that difficult to believe.
The 43-year-old spent roughly $570,000 on a 2,400-square-foot custom home that overlooks a lagoon in the Silverton section of Toms River.
Besides a nice view, D’Arpa’s three-story house will include three full bathrooms and four bedrooms, as well as a patio, a roof deck, two back decks and a single-car garage and storage space similar to a basement in an elevated flood zone.
But while his house may feature a unique design, it also represents a common trend in the real estate market, as today’s homes grow fancier, larger and pricier as buyers hunt for more living space.
“It was kind of like a life goal,” said D’Arpa, owner of four Nutrishop stores in New Jersey. He will move into his home later this month. “The space is not necessarily needed, but just something I wanted to do. That way if I do have a child or two, the house is already built to match. And I like to entertain. I have a big family. I like to have my family over for Christmas and holidays, so I definitely need a big place to have as many people in my family.”
Many of today’s buyers seem to want their houses to include all the bells and whistles, both inside and outside, from bathrooms and bedrooms to decks and porches. At the same time, however, homeownership rates remain mostly stagnant, income growth lags behind the rising price of homes, and the size of families and households continues to dwindle even as houses get bigger.
“The home (is) still somewhat of a statement and status about yourself,” said Peter Reinhart, director of the Kislak Real Estate Institute at Monmouth University in West Long Branch.
Rising square footage
The average square footage of newly built single-family homes in the U.S. ballooned by nearly 57 percent to 2,598 square feet in 2013, compared with 1,660 in 1973. The Northeastern region of the country claims the second-highest average square footage, which rose by 65 percent – an even faster rate than the rest of the nation – to 2,636 from 1,959 during the same span, according to the U.S. Census Bureau, which does not track the figures by state.
John Kelly, left, owner of K&K Building and Remodeling, and Joe D’Arpa look over the plans for D’Arpa’s new home still under construction in Toms River, N.J.(Photo: Bob Bielk, Asbury Park (N.J.) Press)
“There’s a demand for larger homes and more upgraded homes,” said David Hansel, president of Lakehurst-based Alpha Funding Solutions, which provides quick access to short-term capital for builders. Hansel estimates that his company started funding the construction of 500- to 600-square-foot-larger homes during the last two years.
Yet the number of people living in each home continues to steadily decline. The average number of people per household in the U.S. dropped to 2.54 in 2013 from 3.01 in 1973. Families, more specifically, fell to 3.12 members from 3.48 during the same span. The Census Bureau does not track those figures by year for the nation’s regions.
“I would say the last ranch house we built was probably about four years ago,” said John Kelly, president of Beachwood-based K&K Building and Remodeling. “It’s been kind of increasing for the last three or four years. In the last two years, it’s really leveled off to 2,400 (square feet) and up.”
As expected, bigger homes mean far heftier price tags. The average sales price of newly built single-family homes in the U.S. exploded by 419 percent to $324,500 in 2013 from $62,500 in 1978, the earliest available year. Even with inflation, that 1978 figure would work out to only about $228,000 today, according the Bureau of Labor Statistics calculator. The Northeast owns the highest average sales price, which rocketed by 646 percent – also at a faster pace than the rest of the nation – to $469,000 in 2013 from $63,000 in 1978.
Joe D’Arpa examines the bathtub within the master bathroom in his new home, which remains under construction in Toms River, N.J.(Photo: Bob Bielk, Asbury Park (N.J.) Press)
During the course of just one year, the average sales price of newly built single-family homes in the U.S. surged by 20 percent to $324,500 in 2013 from $292,200 in 2012. In the Northeast.
“You have certain towns that have held back and others that have really pushed up further,” Hansel said. “I would venture to say that we’re probably looking at double-digit increases since the end of last year, but that has a lot to do with the interest rate environment with people that had been waiting on the sidelines while the market was depressed and realizing that things are starting to move.”
Income, however, lags behind at a much slower pace than housing prices when adjusted for inflation. The median income in the U.S. grew by 9 percent to $62,241 in 2012, the latest available year, up from $56,975 in 1978 inflation-adjusted dollars. Median means half made less and half made more.
Meanwhile, the U.S. homeownership rate continued to erode to 65.2 percent during the fourth quarter of 2013 from 65.4 during the fourth quarter of 2012.
“The people that are buying houses, more and more, tend to be the better-off-financially people,” said Reinhart, of the Kislak Real Estate Institute.
In fact, all-cash sales accounted for 42.7 percent of all U.S. residential property sales during the first quarter of 2014, up from roughly 20 percent during the first quarter of 2011, the earliest available year, according to RealtyTrac, an Irvine, Calif., company that tracks the housing sector.
Bells and whistles
Newly built single-family homes seem synonymous with more bathrooms and bedrooms.
Of the 569,000 homes built last year throughout the U.S., 188,000, or 33 percent, contained three or more bathrooms, the largest share since the tracking of such houses began in 1987. Similarly, 251,000, or 44 percent, of last year’s total houses featured four or more bedrooms, the largest share since 1973..
And new houses also come with far more amenities.
Of the homes built last year, 301,000, or 53 percent, came with a patio, 361,000, or 63 percent, featured a porch and 127,000, or 22 percent, included a deck.
“That’s another trend … we’ve seen, too, in the last few years, is finishing the basements,” Kelly said. “People seem to want more space.”
Most new homes, however, remain modest in their number of floors.
Of the homes built last year, 233,000, or 41 percent, came with one story, 305,000, or 54 percent, with two stories, and 31,000, or 5 percent, with three stories or more.
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