Buyers want smaller homes, with freebies

As the economy ground to a halt in 2008, builder Wade McGuinn couldn't sell even one of his $145,000 town houses in his Irmo subdivision.

Six months ago, McGuinn started building smaller cottages, priced about $20,000 less, and giving buyers choices of extras: granite countertops, garages or stone exteriors.

Since then, McGuinn says he has sold more than 20 homes in Murray Landing.

The Great Recession has given home buyers the upper hand, forcing builders and other sellers to make price concessions to snag elusive sales. Midlands home sales have nose-dived 30 percent since peaking in 2007, according to industry data.

The average home price in the Midlands has fallen 8 percent so far this year to $159,711 from its peak during the same period two years ago. Higher-end homes, those above $300,000, are losing the most value, real estate experts said.

The result?

Smaller, less expensive homes.

New luxury homes, for example, now are about a third smaller in size than they were several years ago and are down in price by a third to a half, McGuinn said.

Smaller homes in the $250,000 price range and under, including many starter homes, are down about 15 percent to 25 percent in price and size, he said.

Buyers need those lower-priced options because banks have clamped down on their lending practices. "It's easy to get a loan, but it is hard to get a loan for more than you can afford," McGuinn said.

'CASUAL OBSERVER WOULD NEVER KNOW'

Other builders say they too are finding that new home buyers are more often choosing smaller homes that make better use of space than new homes did several years ago.

Inspired Communities of Columbia said buyers like a new 1,150-square-foot town home it is building in several neighborhoods.

The two-bedroom, 2 1/2-bath homes are $20,000 cheaper and 200 square feet smaller than the company's next-biggest model, said Brian Boyer, senior vice president of real estate. The smaller town homes include a stacked washer and dryer, a tub and shower combo in the master bath and slightly smaller closets to save space - and construction costs.

"From the outside, the casual observer would never know the difference," he said.

Boyer also has offered incentives for a limited time, such as free upgrades to granite countertops and hardwood floors, to lure in buyers.

And it's all helped. Boyer said he sold at least 30 of the smaller homes in the past year.

Sellers of existing homes also have found that buyers are asking for more than they did several years ago. At the peak of the market, buyers were competing just to get an offer accepted - even on homes that needed work.

Today, buyers often are asking for repairs if an inspection reveals any issues, said Barbara Lowrance Hughes, a real estate agent in Columbia for 35 years. Sellers often are having to agree to repair the roof and replace the water heater to keep a qualified buyer interested.

'PEOPLE HAVE LEARNED A VALUABLE LESSON'

At McGuinn's new cottage homes in Irmo, buyers often are trading an extra bedroom for "flex space," such as a loft where they can keep a small home office.

Buyers in larger homes are sacrificing formal dining and living rooms, "which at one time were a must," McGuinn said. They also are ditching libraries, parlors and studies, he said, opting instead for a more casual open area near the kitchen for entertaining and family life.

"People's overall lifestyle in general is a lot less formal," he said. "The overindulgence that we were having before this recession has kind of gone by the wayside.

"I think people have learned a valuable lesson," McGuinn added. "It's not a bottomless pit on the income side. I don't know anybody that takes their job for granted."