New home preview: In sync with housing trends

Homebuilders in the Chicago area are more optimistic about the spring market this year than they have been in several years, thanks to an improving economy and the fact that many buyers of newly constructed homes seem to have finally digested the new reality and decided how they plan to proceed.

It took several years for that to happen.

“We are off to a very strong start so far this year,” said Chris Naatz, vice president of sales for D.R. Horton Homes. “Everything is relative, and compared to previous years, the market is hot. We are seeing consumer confidence increasing as people recognize the prices and the interest rates right now are amazing.

“Buyers are still being practical by right-sizing their homes, but they still want nice amenities.”

In the past, many people wanted the biggest house they could get for their money. “Now they are buying what they need and are firm about the size of the monthly payments they can afford,” Naatz said.

D.R. Horton is seeing good activity in the Crown Point, Ind., market, as well as in the Naperville and Plainfield areas. Naatz said sales are strong in the builder's amenity-filled communities in Pingree Grove and Plainfield because the clubhouses, pools and other family features in those two communities allow for socialization and become an extension of people's homes.

“But no matter where they are buying, people want open designs, second-story bonus rooms where their children can play right away without finishing the basement; and flexible space that can evolve, for instance, from a toddler play room to a gaming room for older children and eventually to an office for the parents,” Naatz said.

“People are still looking for value and wanting to cut a deal,” said Andy Konovodoff, president of K. Hovnanian Homes in Illinois. “And while they definitely want to avoid taking out those jumbo loans, they are continuing to opt for nice amenities like two-tone kitchen cabinets, rich granite (counter) tops and wide plank and/or distressed wood floors.”

All in all, Konovodoff and his colleagues are convinced sales are going to take off during the third and fourth quarters of 2012.

“We have been bouncing along the bottom of the market for some time now and the indicators are all pointing toward a change,” Konovodoff said. “We have tightened our belts and gotten rid of our legacy properties and all of the builders are now seeing fewer losses. A few have even seen some profits. All of the big builders are looking to start moving forward again toward the end of the year.”

The biggest trend Konovodoff has noticed is the market is hottest east of Randall Road and from Wauconda on the north to Bolingbrook on the south. Homes outside of that hot quadrant are selling for much less, he said.

He is even considering getting back into the townhouse market in places like Glenview and Naperville “where it makes sense,” he said. “Townhouses will only work in mid- to high-end markets with good schools and good addresses. Schools play an important part even when buyers don't have children because the quality of a community's school system says a lot about a town.”

Pulte Homes obviously agrees because one of its hottest new communities is Gateway Estates, a townhouse development in Park Ridge.

Billed as “urban living at its best,” Gateway Estates offers five different three-story floor plans with two-car attached garages, patios and balconies. Townhouses include amenities like granite countertops, stainless steel appliances, hardwood floors throughout the main floor and luxurious master suites. Options like home theater packages, fireplaces and in-home elevators are also available. Homes there start in the mid $400,000s.

“Prospective buyers have told us they want good schools and access to transportation to downtown Chicago for employment and entertainment. It's all about location for them,” said Valerie Dolenga, a spokeswoman for Pulte Homes.

“We see most of our traffic coming from entry-level buyers, young professionals, and active adults, (and) empty-nesters who are obviously a bit more insulated from the housing environment,” she said. “These buyers are looking for homes in established suburbs. So that's where you're seeing Pulte opening new communities. In fact, we have a new community in Glenview coming in 2012.”

John Wozniak, president of J. Lawrence Homes, said his company also is seeing steady interest from young couples, families and downsizers.

“Even in tough economic times, people are still getting married, having kids … or having their kids grow up and move out. And that means people still have need for new homes to fit their lives,” he said.

The homes they are seeking, however, have changed. Instead of buying four-bedroom houses, for instance, they are buying three-bedroom homes with lofts that allow for more daily living space. In some cases, Wozniak said, people are even buying houses that are 200 or 300 square feet smaller than they might have before, and instead are spending the money on more amenities.

“Homebuyers don't want to be pigeonholed with a home that is designed as a ‘starter' home or a ‘downsizing' home. They want a home that will evolve as their needs evolve, and so floor plans need to be very flexible,” Wozniak said. “That first home for a young couple today needs to be able to accommodate a family in the future, and that empty-nester home may need to offer a place for an adult child returning to the nest, or provide space for hosting grandkids for the weekend.

“People's perspectives have changed. They are no longer thinking they will only be in a house for five years. Instead, they realize that chances are good they will be there 10 years or more, and they want certain things,” Wozniak said.

He said today's buyers are also taking advantage of lower costs and interest rates by buying a home in more expensive locations, primarily infill areas east of Route 59. “We are no longer seeing emerging growth areas the way we were before the recession,” Wozniak said.

Consequently, he, too, is seeing the wisdom of possibly building townhouses in infill locations, closer to the city, which will appeal, in particular, to younger people.

“They want an urban feel and an environment that is close to something,” Wozniak said.

Wozniak also says buyers are increasingly interested in eco-friendly features, both for reducing their own carbon footprint and for reducing their energy bills.

“Green building materials and features are no longer something that buyers expect only in custom homes; they want to see these things in all homes, across the spectrum of style and price point,” said Wozniak. “They want to see upgraded insulation, thermal windows, low-VOC products, highly efficient furnaces and more.”