Is Small the new Big?

It occurred to me as I was watching the coverage of Michael Jackson's death this past week, especially the images of his personal fantasy land, Neverland Ranch, that large, expansive homes are quickly going the way of the fax machine.

Both large and small builders are rushing smaller and smaller homes to the market as quickly as they can. KB Home has introduced their "Open Series" which is effectively competing not only with other homebuilders, but also with deeply discounted resales and foreclosures in many of their markets (read Big Builder article about the Open Series here).

There is much evidence that well designed, low priced units are still finding willing buyers. We continually hear from builders and their sales agents that their best selling units are their smallest floorplans. Of course, their smallest floorplans are usually priced the lowest. So this begs the question, does size really matter? Obviously, there are many factors that go into a buying decision such as community, product design, location, access to transportation and jobs, but the primary driver of the buying decision is price. And not only the base price of the unit, but the monthly payment. We recently had the good fortune of having lunch with the president of a major regional homebuilder and he said the marketing tool that is working best for him in this market is a big red sign on the side of his models that reads "from $899 per month".

It may be an Off the Wall idea, but reducing the size of your units is really a means to the end, which is offering product that is priced to sell, a real Thriller in this market.