- The Washington Times - Thursday, February 20, 2003

Recall the starter home of yore detached single-family house, two bedrooms, maybe 1,200 square feet, modest lot and a neighbor just a few paces away. They don't make them like they used to. Today's new starter home is likelier to be a town house or a condominium. Meanwhile, the average stand-alone house is bigger and costlier than ever. The U.S. Census Bureau reported that the number of newly constructed houses in the Washington area measuring 3,000 square feet or more jumped from 15,800 in 1985 (then 31 percent of all new houses) to 38,400 in 1998 (nearly 56 percent.) The percentage of new homes with four bedrooms or more also jumped, from about 25 percent to 47 percent.
Prices are up, too. A report released in the fall by the Department of Housing and Urban Development showed prices of new homes in suburban Maryland and Northern Virginia averaged in the mid- to upper-$300,000 range, more than $150,000 above the national average.
The supersizing isn't happening only in new suburbs. Older neighborhoods such as Bethesda and Kensington are looking more like patchworks of old and new, as buyers snap up land and start from scratch, building bigger houses that dwarf the legacy homes next door.
Why the shift? Dale Mattison, a veteran agent with Long & Foster Realtors, said people simply need more space than they used to.
"There are lots of people that work from home and are looking for that extra room for an office or study, or for a computer room or playroom for the kids," he said.
He said homeowners want more informal living space (translation: that old never-lived-in formal living room is out) with open kitchen/family combinations, "getting back to the days of old with everyone congregating in one place in the house, but that place being much larger in scale."
Builders are responding to increased demands from buyers at all levels for space and amenities such as fireplaces, higher ceilings and two-car garages, said Gopal Ahluwalia, vice president of research for the National Association of Home Builders.
"The cost of land has been going up, but the size of the lots has been going down. Consumers are willing to accept a smaller lot, but not a smaller house," Mr. Ahluwalia said. "Consumers are willing to commute longer distances for the house they want, but not willing to give up the space."
Juliet Schor, an economist and author of "The Overspent American: Why We Want What We Don't Need," notes that "need" is a social construct, driven by greater media exposure of how the better half (or richest 20 percent) lives. In other words, status consciousness is overtaking common sense.
"People are upscaling their homes," Miss Schor said, "but the square footage per person is so much greater.
"If it were demographically driven or lifestyle-driven, our houses should be getting smaller. And people are in them less."
This new dynamic leaves first-time buyers with tough choices. Do they move farther outside the city to get that newer and bigger dream house? Do they make some sacrifices for the sake of a better location? Or do they go for broke to have it all?
Financial adviser Ric Edelman sees the third scenario all too often.
"[People] don't have the down payment to get into the house. So they borrow money from either their family or from credit cards, they cash out their 401(k)s at work, they scrape the money together. They put every cent they can into the down payment."
The result, Mr. Edelman said, is a huge mortgage payment and "absolutely no cash reserves, which means the very first thing that goes wrong, they are in immediate financial jeopardy."
The risk doesn't seem to be turning off buyers. Homeownership is up, and not just among the traditional young married couples. "Today a lot of single people buy a house or a condo and think nothing of it," said Esther Pryor, managing broker at Avery Hess in Tysons Corner. Young buyers are more savvy about financing thanks to the Internet, and their lending options have expanded.
"In today's market, there are so many more mortgage programs available," Miss Pryor said. "Today you can get a private loan with no money down. Kind of similar to VA, except you don't have to be a veteran."
A zero-down state government loan helped free-lance writer Kelly DiNardo and her husband buy a three-story, two-bedroom brick town house in Fairlington a year and a half ago. Mrs. DiNardo said the house part of a 1940s development originally built for Pentagon employees represents a trade-off.
"I would prefer to have a master suite and have our own bathroom," she said. "It would be nice if some of the things were newer; we definitely have some of the problems of an older home. But on the other hand, we have a really great community here, our house has a lot of character, we're inside the Beltway, we have a patio, we have beautiful hardwood floors. It was definitely a compromise for us. But price dictated what we could do."
The DiNardos put about $6,000 into renovating the 1970s-era kitchen and received a "very small loan" from her parents that they repaid.
"It was definitely a little bit tight for the first few months, but our mortgage payment was not significantly more than the rent we had been paying," she said.
She said they managed to stay within their range of affordability overall, with a surprise payoff: The house's value has shot up by nearly $100,000.
"It's the best investment we could have made," she said.
Mr. Edelman warns that not every buyer is so lucky. People often fail to consider settlement costs, property taxes, decorating and maintenance as part of a home's total cost, and he points out that counting on resale profits is not a safe bet.
He cites Centreville, Germantown and other suburbs as examples where property values have been flat or have declined during a seven- to 10-year period.
For R.J. Clarke, who recently moved into a new two-bedroom condo in Alexandria's Cameron Station development with his wife, the decision to buy was based on needing more space and wanting to build equity but it didn't come without compromise.
Though Mr. Clarke said he would like to have purchased a detached single-family home, "it just didn't seem worth it to live in Leesburg or somewhere out past Dulles" to afford one.
Of course, children are a factor.
"If our family grew pretty fast for whatever reason, we would have to consider moving because we don't have space for more than one child," he said, and he has considered renting out the property instead of selling it.
HUD says the market for both new and existing homes in the Washington area remains robust. Five or 10 years from now is anyone's guess, so it pays to double-check the math before splurging on that first house.

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