Buyers Snap Up Smaller Homes

This trend is not exclusive to the building market, and in a place like Charleston with fabulous smaller properties in styles from classic carriage to clever Craftsman, many people inspired to make more out of less choose to remodel an existing home.

"Ross Chapin and Jim Soules, think small in a way that is practically un-American. They build tract houses that are half the size of the average U.S. home and cost a lot more per square foot. What is surprising is how quickly they sell them. The men are building their fortunes with buyers willing to pay more for less. Mr. Chapin, an architect, and Mr. Soules, a developer, met by chance in 1996, when nearly everyone else in the housing market was thinking big. Now, as the surplus of unsold McMansions increases, other developers are starting to lean their way.

In the past decade, the two men have built about four dozen Craftsman-style cottages that range in size from 800- to 1,500-square-feet. The houses are squeezed into five boutique-sized tracts, all within a two-hour drive of Seattle. Some were melded into more spacious suburbs under zoning laws modified to ease density restrictions for small houses. Most were built around a grass commons shared by a dozen or so like-minded residents who boast of their tract's smallish carbon footprint.

Developers in Milwaukee, Boston, Indianapolis and elsewhere are looking to spread the idea beyond the Puget Sound, and for good reason. While falling home prices and sluggish sales have slashed new housing starts by a quarter in the past year, Messrs. Chapin and Soules say they field a dozen calls a week asking, 'When's your next project?' They have one house left for sale, a two-bedroom, two-bath cottage of 1,000 square feet in nearby Redmond, the home of Microsoft. At $599,950, it isn't cheap. The median price last month for a single-family home in the neighborhood was $542,500. Residents of the tiny tracts say they don't mind paying a premium for such touches are hardwood floors and custom cabinets because the two men develop more than just housing.

'We walk into each others houses and borrow sugar and do all the kinds of things you did in the 1950s,' says Pat Hundhausen, a retired special education teacher.

Mr. Chapin, the architect, uses clever design tricks to give the houses the illusion of more space. Corner windows add light and better views. Large skylights in the upstairs loft keep sloped ceilings from feeling cramped. Hollowed-out interior walls provide built-in bookshelves and cubbies for pictures and knickknacks. Every crawlspace is used for storage. He worked with Mr. Soules to give the houses their signature retro look.

In Indianapolis, developer Casey Land learned of the small home developments in an industry magazine and hired Mr. Chapin for a 21-cottage project. The houses will range in size from 875 to 1,600 square feet. At first, Mr. Land says, his bankers were skeptical, especially those living in 3,000-square-foot homes. 'We're all downsizing,' he says. 'It's tough to do, but we're all getting there.' He predicts the social life will be a stronger draw than square footage. 'These days, we drive to the house, open the garage door, go in,' he says. 'But it's important to get to know your neighbors. I think people miss that.'"

For Sara Lin's full Wall Street Journal article: http://online.wsj.com/public/article/SB121633957931763985.html?mod=2_1578_leftbox