Smaller Homes, Bigger Fridges?

Trends for 2010: SUV-sized Fridges

Here's an early 2010 housing and home style prediction: smaller homes and bigger . . . . refrigerators.

Really.

It's got nothing to do with Americans being increasingly overweight (obviously true); average household size getting bigger (the opposite is true); or even Thanksgiving approaching (that's just a seasonal blip).

Rather, it's more a feature of today's economic landscape.

Here's the logic:

In a rocky economy, people eat at home more.

Sooner or later, meat loaf, tuna casserole, and spaghetti (or pizza, chips, and ice cream) get old. And fattening.

Meanwhile, with all that "staycation" time on their hands, people apparently are watching . . . cooking channels (what are there, 14 of them now?)

From there, it's only a small evolutionary step to start preparing better, more interesting food -- which necessitates buying more and better ingredients -- which takes up more space!

More Educated Palates

Think of it this way: 25 years ago, the typical American fridge stocked milk, eggs, red meat, and some veggies.

Now, at least in more well-to-do households, the list can easily include things like fresh basil, arugula, goat cheese, three different kinds of kefir, two different kinds of olive oil, etc.

Add to that modern maladies like lachtose intolerance, peanut allergies, etc., and suddenly every family member has their own, unique dietary requirements.

SUV's may no longer be in fashion, but the refrigerator equivalent is increasingly starting to show up in the kitchens of upper bracket homes.

4400 W. 25th St. in Fern Hill

Near Fern Hill Sunday? Come Look!

Where: 4400 W. 25th St. (two blocks west of Cedar Lake in south Minneapolis)

When: 1 p.m. - 3 p.m. on Sunday (10/4) -- or anytime by appointment

What: Open House

How (much): $749,000

Who: listing agent - Ross Kaplan (612-925-7701); broker - Edina Realty

Rules are made to be broken.

Normally, I don't skip the front exterior shot of a home in favor of the rear, exterior.

Except in this case, it's much easier to see that the home's foundation is over 2,000 square feet, and that there's a huge, lower level walkout. If you're doing the math, that translates into potentially 3,700 finished square feet (much of the lower level is now unfinished).

Want to the see the front and inside (plus the 59 feet of lakeshore on Twin Lake that comes with)?

Stop by between 1 p.m and 3 p.m.

P.S.: Forgot to mention that I am a "Cedar Lake Specialist"

Housing Market Subsidies: 'Sauce for the Gander'?

"Buying Too Many Votes -- er, Mortgages?"

Dear Jack: Don't buy a single vote more than necessary. I'll be damned if I am going to pay for a landslide."

--JFK quoting a made-up telegram from his father, Joseph Kennedy

What recalls the above anecdote is Ben Bernanke's so-far successful efforts to keep mortgage rates low -- now under 5% again -- and therefore provide support to the embattled housing market.

But in committing $1.25 trillion to the effort -- apparently, the Fed has already deployed more than two-thirds of that -- is Bernanke guilty of "buying too many votes?"

If low mortgage rates help the housing market, and a strong housing is good for the economy, what's the harm?

Three Problems

In fact, I see three problems with such heavy, government intervention.

One. It's expensive.

The cost of a $1.25 trillion program to buy up mortgages is, well . . $1.25 trillion. Even that understates the cost of government housing subsidies today.

Throw in the tens of billions pumped into Fannie Mae and Freddie Mac, the cost to the Treasury of the $8,000 tax credit to first-time home buyers, the billions being lined up now to replenish a depleted FHA . . . and the total cost is truly staggering.

Two. Scaling back long-established government subsidies is economically -- not to mention politically -- tricky.

One of the "lessons" supposedly learned from The Great Depression is that withdrawing government help prematurely caused the economy to relapse in 1937.

So too, today's Op-Ed pages are full of competing arguments that even more must be done to nurse the economy back to health, vs. those arguing that the government has already massively overreacted.

Three. Slippery Slope (or, "Target Levels for . . . Everything?")

Philosophically, what's the difference between the government buying up mortgages to support the housing market . . . and buying up equities to support the stock market?

Or, say the government wanted to knock down the price of gold. Why not just start selling from U.S. stockpiles (or announce that it intended to)?

Would we even know if that was happening?

In my experience, markets are messy, constantly gyrating as they absorb new information.

Now consider all the "un-messy" century marks currently on display: S&P 500: 1,000; Dow Jones Industrial Average: 10,000; Nasdaq: 2,000; gold: $1,000/oz.

Technical analysts no doubt can explain the foregoing simply as evidence of the market's affinity for round numbers, both as "support levels" and ceilings.

Still, it gives you pause.

Housing Market Subsidies: "Sauce for the Gander?"

So, do I have any brilliant recommendations?

I wish.

In a perfect world, the housing market would function with few or no government subsidies.

However, in a perfect world, the financial system would never melt down, nor would the government throw ten trillion (!) or so into recapitalizing the institutions that crashed it.

In an environment where so-called Too Big to Fail financial institutions are getting trillions, I have no problem with billions in housing subsidies.

There's no doubt in my mind that the latter is a better investment.

Upper Bracket "Spec Homes"

"Great Room Lite" (And Other Trends)

Where: 4615 Wooddale (in Edina's Country Club neighborhood)
What: new Federal Colonial Revival with 5BR/6BA and over 5,000 FSF
How much: asking price - $1,995,000
When: on market now
Who: list agent - John McDonald; broker - Edina Realty

One of the fun things about upper bracket "spec homes" is that they collect -- under one roof -- all the latest trends, not to mention lots of fun bells & whistles (if you don't know, "spec" means speculative, as in "build it and they will come").

The home featured at today's Exceptional Properties meeting, 4615 Wooddale in Edina's Country Club neighborhood (pictured above), had on display a laundry list of current (and future?) Buyer favorites:

--"Great Room Lite" concept: Combination Kitchen-Family Room-Den; Dining and Living Rooms are laid out more formally.
--Upper level laundry
--Lower level with 9' ceilings (standard is 7'); in-floor heat
--Built-in radon remediation (according to the builder, the cost to install new is $800, vs. $2k-$3k for retrofitting)
--Big, flat panel TV's . . . . everywhere (above fireplaces, bathroom vanities, etc.)
--"Marmoleum flooring" (an all-green variation of linoleum)
--Picture rail moldings . . . on the ceilings! Several rooms used this to define sitting areas directly below
--Lots of bathrooms. In fact, three of the four upstairs bedrooms had private Baths

In addition to all of the above, the home had a "HERS" rating of 52 (that stands for Home Energy Rating System). Even though the range is from 0-100, apparently 52 is a very good score (steep curve!).

And though the illustration above doesn't show it, in the builder's words, the home "scales nicely" with neighboring homes. In other words, it blends in -- style-wise, size-wise, etc. -- rather than sticks out, like so many McMansion's do.

So how much does all this luxury cost in a brand, new 5,000 FSF home in the middle of tony Country Club?

Asking Price is $1.995M.