Why don't we build average homes anymore?
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Posted Aug 29, 2021, 6:33 PM UTC
9376
The tiny plot of land is over $1mm. Sticking a $120k 1950s house on it with 1 bathroom and cheap fixtures makes people not want to pay $1.2m for it.
Instead they build a $680k house with granite and marble and then it’s $1.7m.
Buyers don’t want $1.2m shoeboxes with dated setups and cheap appliances if they can get $1.7m places with heated bathroom floors and massive granite kitchens.
25
In the city of Vancouver, I've seen quite a bit of single family homes being turned into duplexes. Great! More supply for the customers. Inside, there is nothing too snazzy. That would fit the criteria of your average home.
One caveat. The original single family home original cost 2 Mil, but each new duplex sells for 2Mil increase. Hence 100% price increase.
22
I see duplexes getting turned into single family homes in various areas of Toronto. Some areas have less people than they did post WWII!
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Land is expensive so of course builders will fit the largest home possible on the smallest possible lot. They are simply trying to meet demand and be competitive. A smaller home on a larger lot would have a much higher cost per square foot and appeal to a smaller pool of buyers.
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I'd like to see someone test that concept. We live in a smaller home on a larger lot, and when both of our young adult children were looking for houses, this is exactly what they bought. They started out looking at newer, but bought older and somewhat smaller. Neither of them have granite countertops or stainless steel appliances, huge (mostly unused!) master bathrooms or designer anything. They just have solid houses with what are now considered perhaps below average amenities (laminate countertops! The horror!). Both are planning to stay in those houses for a very long time.
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I guess they probably don't live in a high enough demand area? Even the smallest tiny bungalows in Toronto are going for nearly a million, and most of that is in the price of the land.
Why would anybody but a tiny 2 bed bungalow not even close to downtown for a million?
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We don't live in GTA or GVA, the market is somewhat different where we are.
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It’s a mix of zoning laws and how they suppress building the middle solution of low rise buildings and semidetached homes in favor of big houses and condominiums for profit maximization
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Ya, developers would build these types of houses if it was remotely profitable. But cities have zoned themselves to death in Canada and the USA.
The neighbourhood that is widely considered the best type place to live (the tram suburb) is literally illegal to build in this country.
Roads have to be too wide (making sidewalks too small), buildings have to be set back from the sidewalk to have front yards, parking spaces are mandatory, and you can not have apartments on top of shops on the corner of a street. God forbid it “ruins the neighbourhood aesthetic”.
In the 70’s and 80’s, all the middle class home owners banded together in cities across North America and came up with overly strict zoning rules to ensure that immigrants and non white folk could not afford to live in their neighbourhoods.
30 years later and it turns out that all their kids got absolutely fucked because of these laws as there is no middle ground in housing anymore. Until these abhorrent zoning laws are appealed (which only city councils can do, not the federal or provincial governments), housing will always be unaffordable in this country.
Get involved with your cities if you want change and get them to review their residential zoning laws.
If your interested in what I am talking about, check out the “just for bikes” YouTube channel which delves deep into this stuff. His video on the tram suburb really opened my eyes to how insidious this problem is. I’ve linked it below if anyone is curious.
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I utterly hate the suburban wasteland concept we developed here. Driving everywhere is aggravating and these concrete commercial jungles make entire swaths of cities look abhorrent.
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The neighbourhood that is widely considered the best type place to live (the tram suburb) is literally illegal to build in this country.
Source/more info?
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We? What’s stopping you from building an average home if you want one so bad? Reach out to a home building company and get as average of a home that you want.
Developers follow trends. They won’t build something that people don’t want.
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That’s not true. I’m a contractor that would happily do a good quality addition, or build a small footprint home. They key is to build quality rather than quantity.
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I mean yes but what OP is asking is like asking “Why doesn’t Apple make flip phones?” Just because OP wants it doesn’t mean it should be industry standard. that’s when OP should reach out to contractors like you
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I reread what you wrote, you’re right.
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borrowing money to build is harder than getting a regular mortgage
you're probably going to get less for the same amount of money as well
the paperwork also takes longer
and most people don't have the knowledge to properly oversee stuff, so in the end you might not even get a better product or really know if your dudes did a good job or what corners were cut. which is exactly where you stand when buying new or second hand
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Developers also lobby politicians. Our society shouldn't need to rely on everyone being a skilled DIYer to have sustainable housing.
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You don’t need to know how to actually build the house, all you have to do is buy a piece of land and hire someone to build a smallish house.
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Personally I'd like a smaller house but I think the idea is that when the land is already worth so much to begin with a luxury home sitting on that land isn't as much of a stretch.
Most people who can afford a detached house probably don't want a cheap building on their expensive land.
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Only about half of dwellings in Canada are detached homes, and that proportion is steadily declining. (See here.) So automatically you should assume that a given home is being marketed to the people in the top half of the income distribution. In some places, like Vancouver proper, it’s more like 10%. Older builds tend to soak up the lower end of that market anyways, so even in East Abbotsford the market for a new build might be the top 5-10% of income earners.
Also, it’s relatively cheap to build these larger homes. If you built twice as much home, you might spend twice as much on the building, but when land is 80% of the purchase price you’re only really adding 10% to the cost of the property. (In Abbotsford maybe the cost of land is only half of the purchase price; but the general idea holds. A lot of folks are willing to spend 25% more to buy twice as much square footage. I know I would!)
Another reason to build larger homes is to provide space for suites. These homes aren’t always marketed as having suites (as they may not comply with local bylaws), but I’d be surprised if the lower floor of this six-bed executive home wasn’t already hooked up to support a second kitchen/etc. Hard to do that in an “average” home.
And moreover, there are already lots of “average” homes. If you want something average, you can look at buying an older building. Shopping for a newly-built home is a luxury choice; what you’re seeing is reflective of that.
TL;DR: it can make economic sense for both developers and buyers of new homes to prefer larger homes.
Edit: typos (“if you built half as much home” -> “if you built twice as much home”, “executive suite” -> “executive home”)
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Buyer's expect these luxuries and are stretching to pay for these amenities. I agree if homes had white appliances, carpet, arbrite countertop, ... Prices would be less but developers want to maximize their profits.
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And buyers don't want that stuff. They'll pay the developer for additional add ons such as a nicer kitchen, nicer tiles vs 69c beige junk. So builders don't even bother with bottom barrel stuff. It gets built with things people want. My house was a "stripper" model someone built without a central HVAC system... To me that's a huge oversight on the builders part but I guess they had a price point to meet in 2006
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wait what. a 2006 house that doesn't have duct work? i doubt that the upgrade was more expensive than what a retrofit will cost
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I did mini splits when we bought the place.
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good idea. glad you were able to get it done using those. they're much easier to find these days, but there was a time when you couldn't get them here. like ventless dryers now. tankless water heaters are catching on too, but hybrids are still hard to find. enough rambling, sorry.
how are your mini splits doing for heat in the winter? hopefully you're somewhere warmer?
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Some buyers do.
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Developers build what will sell. These properties are being built because that’s what customers are buying.
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They sell because that's all that exists.
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I want heated bathroom floors. I don't need a mini- mansion. Would not mind going back to the 900sq ft homes my grandparents bought- with one caveat: can we also go back to the option of expanding/ modifying said homes without it cost a whole new house in permits?
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This is what we did; added on to a 1200 sq.ft house in an established neighborhood. We only added about 150sq. ft., but reworked a bunch of the space in the process. We had considered selling and moving to a bigger house, but the cost vs. the addition's cost had us staying in the same house.
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those are middle of the road, average homes at this particular time
if everything is luxury, nothing is
one way to look at it is that they're just basic homes being blinged up on the surface, the guts are still basic
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Let's the developer mark up the useless features and finishes to help justify the absurd prices.
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What's wrong with heated bathroom floors? It's life changing! The reason why you don't see small family homes anymore is because they aren't worth building given the cost of land. The cost of a larger home when building new isn't horribly more. I have a 1600sqft home over 3 floors for two people.
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Actually, heated bathroom floors aren't life changing. A manageable mortgage payment instead of being stretched to the limit? That's life-changing. A bathroom rug to warm your toes instead of an extra who-knows-how-much per month might be life-changing.
For what it's worth, we can afford that ritzier house, we'd rather have retirement savings and a lower debt load.
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Yea I'm going to go broke by having a heated floor....
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The heated floor itself won't make you go broke. The additude that views heated floors as a life changing necessity instead of a luxury makes people go broke.
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Exactly this! It's the heated floors, granite/quartz countertops, stainless appliances, hardwood floors, standalone designer master bath tub, at least 2000 sq ft, ... being necessities that can really cause financial problems. I'm not stupid - I like most of those things. But short of winning the lottery (and I don't buy tickets very often) those will remain on my "nice to have" list, not my "must have" list. Must have? A paid off house before we retire.
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I spend most of my time at home and so do most people. So if something such as a heated floor in a kitchen or bathroom is something you want then go for it. I could careless about having something like a pool or hottub
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I agree, in Toronto I'd like a cute bungalow on a reasonable lot, but what I ended up with is a 900 sf condo that's worth as much as I sold my California home for.
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This looks like a pretty average new build to me
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I love the ‘luxury’ vinyl siding on the side.
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Hate those tiny lots, just barely a step up from a townhouse. Langley has similar homes on 68th ave near 188th st. for ~ 1.4M Whole neighbourhood looks cluttered up.
I much prefer older neighbourhoods with wide 66ft lots like this:
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They add 1-2 suites to help with the higher cost of the home. Hence the monster size and higher sq footage. It's the only type of density that you can get until we can break the exclusionary single family zoning restrictions throughout the lower mainland
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Developers are going to make what's most profitable for them
Also, while it doesn't apply to the homes OP is mentioning. A lot of developers are calling their build "luxury" home where is mostly stand white walls doing a "minimalist design".
I think a lot of it is PR and just make buyers feel good about themselves buying while being able up drive up the price.
Yup.
"luxury build" now just makes me think of the absolute cheapest stainless steel appliances they were able to get on a bulk deal, and poorly installed short lifespan vinyl flooring everywhere. Both needing to be replaced within 5-10 years.
They've been using this forever. The first Trump towers were super basic and I believe half a million dollars in the 80s. The brand was the gimmick you paid for.
The thing is that there is no money in making basic starter homes, so the trend has been to build "luxury" housing to appeal to speculators, airbnbs, and higher income brackets, where the real money is.
It's also infill. A lot of new units being built are duplexes. Builders are trying trying maximize the value of square footage of the lot, so the spirit is to exploit the square footage as much as possible by building as upward and upscale as possible. This is also why you see McMansions.
I kind of laugh when I hear "executive" on any remodel where I am.
Especially when it's in an "up and coming" area.
Same with “luxury condos”. It’s just a buzzword at this point.
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I guess this is why none of the developers ever leave enough space to build a road wide enough for more then one lane of traffic.
Even in brand new subdivisions the roads are tiny, no room to park, this drives me crazy. Seems like a safety issue.
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This. Using this as an example since its local to me: N5170594
Backyards are nice but not profitable when land is easily worth 1MM+. Backyard sizes on new builds have been shrinking over the past decade and this is nothing new. Expect to be closer than ever to your neighbors, again to maximize living space. Most new houses also come with fully furnished and ready ensuites for a 2nd family to allow buyers to throw more HH income to the developer.
SFH's and even townhomes in the 1.5-2.5MM range are looking more and more like luxury multi family apartments.
And they cut corners be it anything. I had a property in poco where the technical safety bc passed the developers shitty job and i brought them back to fix the shitty job
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WOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO
int ballmer;
int count = 0;
While (ballmer == sweaty && count >= 0) {
...........printf ("DEVELOPERS")
...........count ++
}
Gonna have to make count an unsigned int or this loop will stop when count rolls around to a negative value. Also ballmer is left undefined. (i know this is all for fun but I couldnt resist!)
Oh crap you're right Also glad someone understood the reference😂
And what's profitable to them is what is in high demands. Customers drive the demand.
This^ There is a basic build cost (land, permits, framing, drywall, flooring, windows, siding, etc). If you built a 5bdrm 5 bath house to a basic finish schedule, maybe you can sell it for 1.6 million?? Through in some alibaba “designer” light fixtures, last years blow out pricing SS appliances, so “edgy” reclaimed effect laminate and you just spent an extra 20k on top of your basic build pricing but now you are asking 2.1mil
It’s all optics marketing…
Ex: with condos- if you find a good 20-25y/o condo with low maintenance fees, it will likely be a 1200sqr ft 2bd/2ba condo (instead of 760 sqr ft 2bd/2ba new construction). You can spend about 40k and do a basic face lift of both bathrooms, the kitchen, flooring and paint. Sure the outside of the building may still look older, but inside can look amazing. You spend most of your time inside your home anyway