Sunday, October 4, 2009
Big Homes, they're so last year.....
During the boom builder and buyers started gravitating to larger and larger homes. Builders did it because it maximized the profit. A 5000 s/f home generated a lot more profit than a 3000 s/f home on the same lot. Buyers looking to make the most profit or suffering from MTV Cribs envy were snapping up these monsters. After all, with homes doubling in value every 3 or 4 years why not go for the big payday. At the peak these large tract homes were selling for up to $1.5M! Think about that, a tract home in the IE selling for $1.5M. It's mind boggling.
Now take away the prospect of making $100% on your home in 3 years (or 5 or 10), and there's not many people looking to buy these monsters. The only hope for a sale these days comes from multi-generational families. These really large tract homes are dinosaurs. A product of a housing market run amok. As a result the prices of the big ones are really tanking in most areas. They are very hard to sell. People are not seeing a big payday, they're seeing a big electric bill, a maintenance nightmare, and a whole lot of house to keep clean.
Here's an example of the big isn't better anymore theory.
16622 Catalonia Dr in Riverside. This home sold for nearly $1.4m right at the peak of the market in late 2006 (by late 2006 anyone with 1/2 a brain should have seen what was coming). This house is typical of the Mcmansions they were throwing up all over the IE. It has 5426 s/f, there are 5 bedrooms and 5.5 baths. Lot's of wasted space in these homes. Large foyer, spiral staircases, grand entryways to the master, master bathrooms the size of a bedroom etc. Lot's of fluff! This particular tract was built by KB homes and is basically the same homes they put into their tract at The Retreat in So Corona. The small single story in this tract is quite nice but the other two models are just too big. There are currently 4 of these big ones for sale in this tract. All are priced between $500k and $575k. One of those 4 is the final home the builder put up on the site of the old sales office. They've been trying to sell it for about 6 months or more, it's currently listed for $569k. The current asking price of 16622 Calalonia is $499k. That is a loss of just under $900k, or 64% (assuming they can get $499k for it).