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FEATURE ANALYTICS home unless you were to gut it," Costello said. "The total cost of homeowner- ship, not just the sales price, is much more important to to- day's homebuyer," he added. In one dramatic example of this, Phoenix-based Meritage Homes advertised homes in one develop- ment as coming with a "free an- nual trip to Hawaii." The premise was that each home saved enough in annual energy expenses to pay for a trip to Hawaii. The homes sold quickly, prompting Meritage to expand the campaign to other parts of the country. "They put the value [of the energy efficiency] into con- text and terms that the buyers could relate to. They wanted to know what was in it for them," Costello said. Energy efficiency isn't the only are not the attraction they once were. There's also less affinity for the sprawling "McMansions" that were so popular before the bust. So in many areas, builders are constructing smaller homes. Similarly, today's new construc- tion focuses on maintenance-free features. Many of the millenni- als don't have the time or skills for some of the maintenance projects, and retired buyers don't want to be burdened with those chores anymore, Costello says. However, there are still a few pockets where the larger, sprawl- ing homes are under construc- tion. "We're seeing in the Carolinas trend that innovative homebuild- ers are latching onto in attracting new homebuyers. Going Small S according to Costello. For ex- ample, one California-based home developer noticed a high concen- tration of Indian and other Asian families—all known for spice-rich foods—moving in. But the smell of the spices tends to linger long after cooking. So he started offer- ing homes with "spice kitchens, maller homebuilders are concentrating on local trends, featuring high ceilings, and special ventilation to remove the smells after cooking. The homes sold quickly. "This is a feature you couldn't find in older homes," Costello said. Multigenerational homes are " also becoming more popu- lar, according to Costello and Hampton Pitts, EVP for the North Carolina and Texas mar- kets at Ashton Woods Homes. While homes with related liv- and Texas—the area where I operate—that some people have short memories," Pitts said. "So buyers are again looking at large square footage homes, but ones that are properly priced." Successful homebuilders are also using more prefabrication, meaning quicker home construc- tion, according to Kent Goetjen, the U.S. engineering and construction industry leader at PricewaterhouseCoopers. "This enables the builder to provide a more consistent product and bring more predictability to what's onsite and when," he said. Experts also agreed that the successful builders have stayed away from speculative construc- tion and don't foresee a return to that practice anytime soon, if ever. multigenerational units feature completely separate living areas and perhaps a common yard or some other type of "multigen- erational compound" built on a couple of combined lots. Lennar is promoting its ing apartments have been around for several years, the new crop of multigenerational homes is much different. Parents don't want to be shuttled down to the basement or up to the attic. So some newer NextGen "home within a home" in Arizona, California, and Nevada. These dwellings feature separate living quarters, con- necting to the two-story main house through an interior door, accommodating boomerang adult children or aging parents who can no longer live safely on their own. There is also a trend to smaller houses in many areas, par- ticularly in downtown locations where space is at a premium. D.R. Horton is building 600- to 800-square-foot homes in Portland, Oregon. Other builders are following suit in areas like central business districts. The move to downtown is another example of successful homebuilders recognizing and building for shifts in housing tastes, Costello says. The smaller homes also cash in on the ener- gy-efficiency trend because there is no heating and cooling of large, unused spaces, as in many of the larger, existing homes. Current new homebuyers Looking Ahead S don't have the interest in do-it- yourself projects, so large garages mand for new homes and relative- ly low percentages of new homes on the market, which should mean continued slow growth. Yet despite the success of some of these homebuilders, there are still some cautionary winds on the horizon, Costello and Pitts say. Though the "fiscal cliff" doesn't mean anything to prospective homebuyers today, if there is no resolution, it could mean a lowering of bond rat- ings and a subsequent increase in mortgage rates. uccessful homebuilders also see positive trends in pent-up de- THE M REPORT | 63 ORIGINATION SERVICING ANALYTICS SECONDARY MARKET