In a down housing cycle, it is generally wise to adjust your product offerings to appeal to a larger segment of buyer demand.
Builders can lower costs per square foot – and the overall home price – by changing out larger floorplans for smaller, more compact designs, and even offering a much wider variety in home size. Some easy and good design changes are as simple as removing living and/or dining rooms, or shrinking the size of rooms. Rarely would you decrease the number of bedrooms.
In addition to offering smaller homes at more affordable price points, we have also been evaluating the financial impacts of changing attached row townhomes to single-family detached homes. This product can achieve a similar density when compared to an attached product, but in a detached format. The benefits of this include:
- Cost Savings: The cost per square foot of building a detached home is usually 10% to 15% less than a comparable three-story attached home at a similar density. Builder insurance costs are also lower for detached homes versus attached homes.
- Reduced Homeowners Association Fees: Homeowners association costs are lower for a detached home versus a three-story attached home.
- Investment Outlook: Consumers will pay more for a detached home than an attached home of the same density because they perceive a better investment value.
- Higher Absorptions: Moving to a similarly priced detached home will help to achieve higher absorptions in this slower market, given the consumer perception that the home offers more privacy and better resale value.