By Jamie Smith Hopkins, Citizen News Services
Bob Kean likes the house he carefully restored in one of Baltimore's upscale neighborhoods. But now -- as he searches for a job to replace the one he lost -- five bedrooms and 4,200 square feet strikes him as a luxury he can't afford.
His plan: Sell and move into a smaller home with much fewer costs. Cheaper utility bills. Lower property taxes. Little or no mortgage.
"I'd prefer to stay exactly as I am, but that's not going to happen. And I accept that," said Kean, 60, who lost his credit management position more than a year ago after his employer was acquired. "If I find a place with about 1,500 square feet, I'm good to go."
When more people are thinking small, however, it's not a simple matter to sell a larger house.
"The high end (of real estate) is seeing a lot of days on the market, and a lot of houses that were previously $1 million and above have taken rather large hits on their price ranges," said JoAnn Moncure, Kean's real estate agent. "About 20, 25 per cent in some cases."
For Kean, that has meant cutting the asking price of his home by more than $200,000. His 94-year-old Tudor Revival house -- three storeys with 41/2 bathrooms, two staircases and a suburban-sized yard -- is from an era when Baltimore's wealthy elite hired staff to run their households. But in the days of the housing market bubble, even working stiffs were thinking big. Price wasn't the only thing that inflated: The typical new American house was 11 per cent larger in 2007 than in 2000, and McMansions abounded.
Now, with huge mortgages harder to get, one in 10 Americans unemployed and many people pinching pennies, the trend is reversing. The median new house built last year was 2,219 square feet, a 2.5 per cent decrease from 2007 and the first year-over-year drop since 1995.
That's not to say that owners are jettisoning big places left and right. Twenty-two per cent of sellers were trading down in the 12-month stretch that ended in June, and they were typically older Americans making "a lifestyle choice," said Walter Molony, a spokesman for the National Association of Realtors. But real estate agents say they're seeing both the want-to and have-to downsizing.
"There are a lot of folks who have been in their houses for decades who need to downsize for obvious reasons -- there's no kids, no spouse," Moncure said. "And then there are the other ones who have realized maybe they've bit off more than they can chew."
As homeowners rocked by the downturn look to economize, even some living in homes of comparatively modest size are thinking of going smaller.
"Tough economic times call for desperate measures," said Rich Pugh, 35, who expects to move out of his 1,700-square-foot rowhouse at the end of November so he can rent it out. He has a tenant lined up.
Pugh rehabs homes in the city and is feeling the effects of the down market. He figures he can save $950 a month by switching to a 1,200-square-foot apartment, even expecting that the rental payments on his rowhouse won't cover his mortgage. Pugh is attached to his place, with its bright colours, skylights and Jacuzzi tub, but he's philosophical about the impending change.
"I don't need a place that big when it's just me, my girlfriend and two dogs -- two small dogs," he said.
Kean feels the same way. His kids are grown, and he thinks his house was meant for a family. Because he does not have a large mortgage, he could use the sale proceeds to buy a smaller property outright and eliminate monthly payments.
"When your income is so significantly diminished, any level of debt is unacceptable," he said.
Kean's place has been on the market since January. His asking price is $779,900, down from $995,000. Counting the money he put into it when he did a complete renovation, that price would leave him with about $150,000 less than he spent.
The work he did after buying in 2006 was extensive, and Kean had expected to stay until he retired. But he's not complaining. Considering how many people owe more on their mortgages than their properties are worth, he knows his situation could be worse.
And even in these days of national belt-tightening, he can say with confidence that 4,200 square feet is not too large for all buyers.
"What's really funny is, some people have looked at the house and said, 'It's not big enough,'" Kean said.
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