New Realty Reality: Small is the New Big
By Jay MacDonald • Bankrate.com

Dorothy said it best in “The Wizard of Oz.” There’s no place like home.

Like that plucky girl from Kansas, Americans from coast to coast have ridden their houses skyward in a furious appreciation tornado, only to plummet back to earth in a startling new and different economic landscape. The only thing missing is the Wicked Witch of the East beneath our floorboards.

“It’s as though we’ve all awakened from a collective dream in which we were playing a game of full-scale Monopoly with our homes,” says architect Jim Gauer, whose book “The New American Dream: Living Well in Small Homes” may be more timely than ever.

“In this dream, the value of our houses always went up. We were living in an age of astonishing excess, when having and wanting more was a cultural mandate. Those days, for now at least, are over.”

Welcome to the new realty reality. Ostentation is passé. Size is so not cool. Small is the new big. And oh, by the way — have you hugged your home lately?

“People have definitely lost sight of what home should be,” says Barbara Corcoran, a real estate expert who frequently appears on NBC’s “Today” show. “But can you blame them? Every day, they would wake up, hear about a new sale in the neighborhood and realize how much richer they were.”

As Americans focused more and more on the financial appreciation of their address, many lost the thread of what makes a house a home in the first place.

“Those were the gods that were served,” Corcoran says. “When someone decided to renovate a kitchen, the first priority was, what changes would sell well, and the second priority was, what changes would we enjoy? People sacrificed many things they would personally enjoy for the sake of resale. I saw that over and over.”

Now that the Glenda-esque housing bubble has burst, Americans are reacquainting themselves with the joys of homeownership from a new, healthier perspective.

What? People are actually wanting to stay in their homes?

“Oh, definitely,” Corcoran says. “They have no choice. People are rediscovering their homes for two very practical reasons: Homes aren’t selling, and people don’t have the money to go out to dinner as much. That’s kind of where the trend starts, isn’t it?”

Maybe. But there may be something bigger — or make that smaller — going on here as well.

Small is beautiful — again
As the housing bubble grew, homeowners became fixated on the value of their square footage, tracking its worth as closely as a stock portfolio. That’s because we tend to price houses the way we price shrimp — by the pound rather than, say, the way we price bread — by the loaf.
Unfortunately, when that enormous bubble popped, some homeowners realized that all that superfluous square footage was for naught — and in many markets actually depreciated the value of their homes.

 To use Gauer’s analogy, it’s as if the Monopoly board was suddenly overturned, and those with the most plastic houses lost the most. This, in Gauer’s view, is a lesson worth learning.

“I hope it puts the final stake through the heart of the McMansion and encourages us not just to make do with, but to embrace smaller and better-designed homes,” he says.

Just as suddenly, Americans are giving a second look to the small-is-beautiful movement born a generation ago.

“It’s a vindication for those who already have embraced it and a revelation for those coming to it fresh,” says Marc Vassallo, co-author with architect Sarah Susanka of “Not So Big Remodeling: Tailoring Your Home for the Way You Really Live.”

It’s not just that houses became larger as America moved to the suburbs. They began to take on functions that our grandparents could never have imagined.

“You don’t have to own everything that you make use of. You don’t need one room for exercise equipment, one room for a movie theater,” says Vassallo. “Humans are kind of a certain size, and that’s going to determine what you need and how you feel in a space. If you have a dining room that is 16 (feet) by 19 feet, that’s huge, and it’s always going to feel huge.”

The “Not So Big” movement advocates downsizing toward cozier, more enjoyable homes that emphasize quality over quantity. It even dreams up architectural fixes for empty nesters who want to age in place.

“A lot of older people are kind of refugees from their own big house,” he says. “They feel too small in their too-big house.”

Vassallo says the younger generation is already embracing the paradigm, thanks to ever-shrinking technology. “People who appreciate the magic of an iPod smaller than a stick of gum that holds 1,000 songs don’t need to be told that small can be really incredible,” he says.

The biggest obstacle to “right sizing” America?

“Two things: real estate values and schools,” Vassallo says. “In many places, you have a choice between older, smaller homes with less-than-desirable schools or newer, larger suburban homes with desirable schools. You have this conundrum: How do you develop value and desirability in places where the houses are small, and how do you allow for small houses in the places that are presently desirable? If you want to build small, what do you do when everybody else has big? That’s an honest challenge.”

You can go home again
Jake Schloegel, president of Schloegel Design Remodel in Kansas City, Mo., is on the front lines of this aesthetic sea change. He says the housing bust has dramatically changed the nature of his business.

 ”Our large projects, which typically include additions, have really slowed down,” he says. “The focus today seems to be on updating a house, which usually requires less money than to blow out and expand it. The trend seems to be to keep what you have in terms of square footage and just make some improvements to it.”

Partial kitchen or bathroom remodels are the norm today rather than full-scale, down-to-the-studs makeovers, Schloegel says. Instead of adding on, his customers now are more likely to update family rooms with new cabinets or built-ins.

“It’s more about livability than salability,” he says. “Homeowners may not be as aggressive in making their house bigger in a market where values may not be going up or may be going down.”

One upside to the economic downturn: Remodeling is a bargain. Schloegel says his prices are down by as much as 10 percent, and construction materials, which were on an upward curve, have not increased this year.

“It’s a great time to take advantage of pricing for remodeling,” he says. “One of your best returns always is updating your home. It not only makes it more enjoyable, but if you were to resell it, nothing moves better than a home that has been kept up and updated.”

Corcoran, a veteran Manhattan real estate broker, may agree with Schloegel in theory, but she’s a realist when it comes to the recession.

“One thing that works against that theory is, people are very reluctant to spend money on their home — even for their own comfort, even now — because they really believe they won’t get it back,” she says. “Home improvement is seen as a losing proposition, which is a shame because it’s not really true. Improve a kitchen smartly, and you’ll still get that money back. But people don’t believe it anymore. They’re waiting it out.”

Gauer sides with Dorothy: Dollars and cents aside, there is no place like home.

“The scale of our homes should derive from the real needs of our daily lives, not from vanity, insecurity or a need for public display,” he says. “Home should be the setting for life, not the measure of it.”
Posted: May 4, 2009