NPR : Behind the Ever-Expanding American Dream House

The Hamptons are among the most magical places on earth. Every year, the NYTimes, New York Magazine and numerous other publications come out with their "Hamptons Are Dying" article, where the author happens to be someone who knows someone who knows someone else who wears Gucci loafers and sold their house in the Hamptons (and made $500,000 in two years) because they went to Sullivan County and bought a 15-acre parcel for $125,000. Wow! Unbelievable! That's tooooo gooooood toooo beeee truuuuueee! Everyone's going to do that and that will be the end of the Hamptons!!!! Yeah, right. Hey, send me a postcard, will you? While former farmland and wooded sites continue to be developed, changing the vistas we have seen for generations, there is still a tremendous amount of open and preserved space. The Peconic Preservation Tax has worked! One of the most common complaints is that houses are getting bigger and bigger all the time. "It's starting to look like Syosset, where you can pass a cup of flour between houses", whined an acquaintance recently. "No", I said. "Flowers maybe, but not flour." Most of these people use their stoves as planters. Aside from our tastes becoming more upscale and desirous of more square footage, the price of land has appreciated even more greatly on the East End than the prices of homes. That means that in order for builders to justify the end price for the homes they put on these expensive lots, they need to make them larger and with more amenities. Many builders use the formula of thirds: land cost 1/3, building cost 1/3, profit 1/3. So, if a plot costs $500,000, the building cost might be $500,000 and the home should sell for $1.5MM. That builds-in a reasonable profit margin. Make that lot a $5MM purchase price and you end up with a $15MM home value, at least. With half-acre lots going for over $1MM in the villages these days and one-acre lots in the woods and fields going for the same, it drives the size of the houses larger in order to justify the end price. Now with energy costs going up significantly, I see a movement toward more efficiency but with super-high quality. We'll see how much bigger things go with fuel oil at $3.50 a gallon. Hey, can you spare a cup of oil?
NPR : Behind the Ever-Expanding American Dream House