In the future, houses will look more like a home

JACKSONVILLE, Fla. – July 28, 2010 – The house of the near future could look more like, well, a home.

After the economic recession and collapse of the housing market, “smaller, better, smarter” may win out over grand, oversize showpieces, said Jacksonville architect Michael Dunlap. “That’s what I think they’ll be.”

Adds Kermit Baker of the American Institute of Architects: “The era of the McMansion could well be over.”

Baker, chief economist for the AIA, said the recession and an interest in lowering utility costs has already changed how houses are designed and built.

“As the housing boom has passed, there seems to be a renewed interest in investing in properties to make homes more livable, as opposed to real estate that can be resold quickly for a profit,” he wrote in an AIA report.

We interviewed architects and builders to try to figure out what new houses — both mass-production and custom — might look like in the next decade or so.

The consensus was that they might not appear that much different, at first glance. But here’s a way to picture the future home: Take a house built during the past 20 years, then start scaling back — or just plain taking away — some of the features.

All those different roof pitches, scattered over gable after gable? That big two-story vestibule? The formal dining room? Gone. That three-story garage? Down to two. That 3,500-square-foot house? Perhaps you’ll have to do with just 2,800.

It’s hardly deprivation though, say the experts. Instead, they say, think of it as more practical — and perhaps even more livable.

“The formal living room, the formal sitting room, the big grand open entry with huge stairwell and a 28-foot vault to the ceiling?” said Robert Leinenweber, owner of Eastern Shores Construction in Atlantic Beach. “All that’s going away.”

Jacksonville architect Richard Skinner said changes will be dictated by a more uncertain — and more realistic — approach to the house in which you live.

“It’s the ongoing cost of a house that kills you, the mortgage and the utility payments,” he said. “So if you can figure a way to cut those, you’re on the way to solving the problem.”

Baker compiles quarterly reports on home design trends for the AIA, based on information from architectural firms. He’s reluctant to predict what will be happening 10 or 15 years from now, but says you can get clues based on what’s been happening in the recent past.

The smaller house trend has been bubbling for some time. Factors include the influence of Sarah Susanka’s “The Not So Big House” books, increasing land and utility costs, and the fact that families aren’t as big as they used to be.

Last year, USA Today reported that U.S. Census data shows the average size of a new house dropped for the first time in more than a decade. It went from 2,629 feet in the second quarter of the year to 2,343 in the fourth.

“It was gaining some traction even before this downturn,” Baker said. “We don’t really need a 5,000- or 6,000-square-foot home with a big formal dining room, a big formal living room. That doesn’t really reflect us.”

Still, that doesn’t mean houses built in the next 10 or 15 years will be anything like the 1,100-square-foot houses put up after World War II. Those were considered just fine by returning G.I.s and their families, but Americans have grown to expect more.

Baker said lot sizes have been shrinking for a while, but that entry-level homebuyers often want houses that are as big as they can get — and that won’t change.

“I do believe that when the housing market recovers, those home sizes will begin to inch back up again,” he said. But it might take a long time to get back to as big as they were in the go-go years.

Andy Chambers has seen the boom and the bust. He’s president of both MasterCraft Builder Group and the Northeast Florida Builders Association. “Are people going to build bigger, higher-cost houses for the most part?” he said. “I think not.”

Rooms that encourage just a single use — formal living rooms and dining rooms, isolated media rooms –will be the first to go.

“People are just looking more carefully at the space that’s useful,” said Skinner.

In coming years, look for multi-use rooms of flexible design, featuring lots of open space. That central living area is more spacious, tied into a kitchen that’s functional but not over-the-top.

The family area will be focused even more so around the TV screen, which will be even larger, said Skinner: “The TV has taken the spotlight, and people aren’t as ashamed of it as they used to be.”

He also expects kitchens to be more practical than extravagant. And bathrooms? They won’t be the “palaces” of past years. They’ll be nice, sure. But who really needs a palace for a bathroom?

Skinner said there’s plenty of room in the future for modern-looking houses, but he expects something of a return to a more traditional look. “I think there’s this sense of what a home looks like,” he said. “Proportions will become closer to something that looks classically driven; the scale of homes will be more pleasing to the eye. There’s been a lot of movement in the directions of neighborhoods that are more into the Avondale, Riverside, San Marco design.”

For years, people have been envisioning smart “Jetsons”-style houses packed with centralized high-tech systems that will run the whole building.

Those predictions were likely overblown, said Chambers, the builders association president. “The high-tech houses, quite honestly, have never taken off, and I think that’s because technology has exceeded the high-tech houses, because of wireless for the most part.”

And the much-ballyhooed green house?

People are slowly moving that way, though Leinenweber points out that most green construction methods remain too expensive for widespread use. Better insulation and more efficient windows, however, have come down in price enough to be popular.

Leinenweber said he’s also seeing less reliance on conventional building materials. Instead, there’s more cement composite siding and recycled plastic and PVC trim.

Where will the houses be?

Looking at Northeast Florida, there still seems to be plenty of room and interest in development that keeps sprawling farther and farther from the city center.

Jacksonville itself, though, will soon run out of room to expand.

That’s what William “Bill” Killingsworth, director of the city’s Planning and Development Department, has said. He foresees a future in which aging areas of the city are redeveloped into new higher-density developments, ones close to shopping and public transit.

Baker said different parts of the country take different approaches to where to build. But trends seem to indicate one thing. “There seems to be more interest in proximity to something else rather than splendid isolation,” he said.

Copyright © 2010, The Florida Times-Union, Jacksonville, Matt Soergel. Distributed by McClatchy-Tribune Information Services.

Related Topics: Trends

Fannie Mae gets tough on strategic defaulters

WASHINGTON – July 19, 2010 – Borrowers who walk away from mortgages they can afford to pay – making “strategic defaults” – are running increasing risks that they’ll be penalized for doing so.

Starting in October, Fannie Mae says, strategic defaulters will be disqualified for new Fannie Mae-backed loans for seven years after their foreclosures. Fannie also says it will go to court where it can to recoup outstanding mortgage debt from borrowers who strategically default.

Under a bill that’s passed the House and awaits Senate action, the Federal Housing Administration would be barred from insuring mortgages for those who previously ditched a mortgage they had the ability to pay.

Get-tough policies are forming at the same time that about a quarter of mortgage borrowers owe more than their homes are worth.

Fannie Mae buys about 40 percent of all mortgages and packages them for resale to investors. The FHA insures about 30 percent of home mortgages.

Freddie Mac, which also buys mortgages, says it is examining Fannie Mae’s policy.

To determine if a borrower is in default, Fannie examines whether the homeowner still has access to credit and is paying that debt and others.

Cracking down on strategic defaulters is controversial. Some lenders say it is necessary to stem the tide of homeowners shirking their obligations.

“We need to start treating bad behavior with serious and measureable consequences so that we can get this nation back on its feet,” says Daniel Smith, vice president of mortgage banking at First Place Bank in Livonia, Mich. “Washington needs to come up with a uniform law on this issue.”

Others say homeowners who may appear guilty of strategically defaulting really can’t afford to make mortgage payments.

“It seems like an overreaction,” says Howard Banker, a founder of Fair Mortgage Collaborative, a consumer education non-profit in New York. “If you do default, it goes into foreclosure, and that’s already very damaging to your credit.”

Other policies may be more effective than penalizing strategic defaulters, says Mark Zandi, chief economist of Moody’s Analytics. Changing bankruptcy laws to allow bankruptcy judges to reduce debtors’ mortgages is an example, he says.

“I’m not a big fan of using the stick to get people to stay in their homes. There are instances where it makes no financial sense for them to stay in their homes,” Zandi says. “And how do you know, really, if someone is strategically defaulting?”

Two out of five homeowners say they would consider walking away from their mortgages if their homes were worth less than what they owed, according to a survey by Trulia and RealtyTrac.

© Copyright 2010 USA TODAY, a division of Gannett Co. Inc., Stephanie Armour.

Related Topics: Foreclosures

Homeowners hit with higher insurance premiums

DELRAY BEACH, Fla. – July 12, 2010 – Warren Kurtzman was elated when Gov. Charlie Crist vetoed legislation last month that would have made it easier for insurers to raise property insurance premiums.

That’s why it came as a shock when his insurer, HomeWise Insurance, informed Kurtzman two weeks later that the premium on his Delray Beach condominium unit is increasing by 42 percent – from $609 to $864 – this year.

“I thought [the veto] was the greatest thing in the world,” Kurtzman said, “and all of the sudden, I get this [notice] and I almost choked!”

Despite Crist’s veto, and four relatively quiet hurricane seasons, thousands of Florida residents are experiencing similar rate hikes this year. The reason: Crist’s veto doesn’t end rate increases – they’re still allowed for some reasons, with state approval.

In the past 12 months, the Office of Insurance Regulation approved about 140 residential insurance rate hikes, ranging from less than 1 percent to 29 percent. Some individual policyholders’ bills went up more because the approved rate increase is a statewide average.

The increases were approved after many insurers argued that efforts made by the state Legislature to cut premiums in 2007 and 2008 had left them unable to keep pace with claims and other costs. Lawmakers were pressed to act after policyholders experienced huge increases in premiums – doubling and tripling in some cases – after Hurricane Wilma in 2005 and other storms.

Last year, Crist signed legislation that made it easier for insurers to boost premiums as much as 10 percent annually to pay for certain backup coverage costs. About 22 of the 140 increases were filed under that law.

Regulators say there are deeper problems with the property insurance market, including the development boom during the past few decades and, in turn, an increase in the possible damage that could result from a major hurricane.

As homeowners’ policies come up for renewal, they are learning that their rates are rising. Some say they feel helpless dealing with their property insurance, which is required by most lenders.

Karen Leshin, of Weston, said her State Farm property insurance premium increased 60 percent, from $3,198 last year to $5,110 this year. “How is it possible?” she said. “We’re kind of caught between a rock and a hard place.”

Leshin said she wants to move out of Florida due in part to the cost of insurance. But like many other Floridians, her home isn’t worth close to what it was when she and her husband, a retired airline pilot, bought it. She said they have bought State Farm policies to insure their home and cars since 1971. Before paying the higher premium, she said she tried shopping around but found other insurers charging about the same.

“I guess they all got the memo,” she said.

Kurtzman said he plans to shop around. He said he can’t afford a dramatic rate hike because he’s on a fixed income after retiring from a career in finance: “I’m getting killed in the stock market.”

Sylvia Dow, a retired communications worker, said her insurer, Southern Fidelity Insurance, increased the premium on her Margate home by 36 percent from $2,010 to $2,729 this year.

“It was quite a shocker, but we have to deal with it because we have to have insurance,” she said.

Dow said she was surprised when Allstate dropped her coverage in 2007 because she doesn’t live near the coast and she hasn’t filed a claim in the 20 years that Allstate covered her home and car.

Major national insurers such as Allstate and Nationwide dropped policies after the 2004 and 2005 hurricanes. State Farm, the state’s largest property insurer, faced some unique challenges.

The company announced its plan to leave Florida’s property insurance market early last year after the state rejected its request for an average rate hike of up to 67 percent.

Months later, the state Legislature approved a sweeping measure to deregulate insurance rates, hoping it would help the state keep companies like State Farm in Florida, but the bill was vetoed by Crist.

But Deputy Insurance Commissioner Belinda Miller said State Farm’s low rates were its own doing: Unlike other insurers, the company offered voluntary discounts, not required by the state, for years.

“That was not rate suppression. That was a company doing in Florida exactly what it’s doing in other states,” Miller said. “They put us through hell over the 67 percent rate increase when in fact at least half of that was self-inflicted.”

Eliminating the discounts translated to a statewide average rate hike last year of 28 percent for State Farm, regulators estimated. State Farm struck a deal with regulators to stay in Florida but to drop 125,000 policies and increase rates by another 14 percent, on a statewide average basis.

Miller said Florida’s problem stems from its growth in development in recent decades, which means there’s more potential damage from hurricanes. At the same time, insurance companies have less appetite to cover catastrophes; they’d rather sell other, more profitable types of insurance, such as autos and other vehicles.

“It’s not that we have more hurricanes. The problem is we’re building more in their path,” Miller said.

In addition, some lawmakers and regulators argue that it’s unclear just how bad insurers’ financial health is; many pay fees to affiliate companies to manage parts of their business. Unlike the insurers, their affiliates aren’t subject to regulatory restrictions on profit and dividends, and they aren’t required under state law to file audited financial statements.

“It seems like there’s a big loophole there,” said Chris Cury. Cury is a real estate developer who recently got his license to become a public insurance adjustor.

State Farm increased the premium on Cury’s home in Plantation from $2,500 to $4,200 – 68 percent. “I didn’t understand it because there hadn’t been hurricanes in several years,” he said. “I’m in the real estate business, so it hit me hard.”

Gail Bierworth, of Lighthouse Point, said State Farm increased her homeowner insurance premium 83 percent, from $3,395 to $6,214, even though her home was completed in 2005 and has hurricane impact windows and other features fortifying it against storms. She said State Farm covers her home and car. She’s purchased her homeowners insurance from the company for 20 years – and never filed a claim.

“I can’t believe that a company can raise the premium 83 percent in one year. This seems to me to be most unconscionable, especially at this time of our uncertain economy,” she said before calling state officials to complain. State officials, she said later, weren’t very helpful.

She ultimately lowered her coverage dramatically – from $698,600 to $390,000 – to bring the premium near last year’s, $3,420. “That was the lowest they’d be able to lower my coverage,” she said. “It’s probably on the low side … but I’m comfortable with it.”

Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla., Julie Patel. Distributed by McClatchy-Tribune Information Services.

Related Topics: Property insurance