Skinny homes are built for any number of reasons. It could be space constrictions, tax or code restrictions, the creative muse, or even for the vengeful-minded to grind an axe with a family member.

What does it mean to say a house is skinny? You know you’re in one if you can stand in the center of the room and touch opposing walls. Alas, many New Yorkers can identify, and the following homes are all in cities where space is at a premium.

The Dutch may be more familiar with the phenomenon. Take the example of the tall and slender traditional Dutch homes of Amsterdam pictured here. Amsterdam is rife with them because at one time there was a tax on the width of residences. The staircases of such structures are so narrow and steep they’re practically ladders, which made furniture installation and removal an issue. Hence, the narrow homes of Amsterdam also come with hooks at the top, so homeowners could hoist furniture up and down and through the windows.

Narrow Mist, a traveling art project by Austrian artist Erwin Wurm (pictured here in Venice) is modeled after the house he grew up in, only it has lost most of its width on a diet. The interior has narrow furniture, narrow bookshelves, a narrow landline telephone, narrow toilet and bathtub, and narrow rooms papered in 1970s patterns. Interior images can be found on the Design Boom website .

The oblong structure plugging up an alley resembles a giant version of several different personal items, but it’s a building called Ermitaz, or Ermitage — designed by Jakub Szczesny to be a hermitage for Israeli writer Etgar Karet. At a maximum width of four feet wide and 28 inches at its narrowest, it’s the skinniest house in Poland and maybe even the world. However, because the structure doesn’t conform to Polish building code the Centrala website calls it an “art installation in crack between the buildings” (or as we like to call a building crack, an “alley”).

This architecturally modern home overlooks the Puget Sound. While not much wider than the single-car garage it’s built over, the wall of windows facing the view help it feel spacious. It has flooring of cork, slate, concrete, ceramic tile and bamboo; an elevator in which to ascend to the roof deck, which has a stainless steel gas fireplace; custom lighting, and is wired for TV and Internet.

Roughly 112 metro areas in the U.S. are still dealing with 10% unemployment or greater. That’s down from 166 at the same time last year, but tell that to folks in El Centro, Calif., where nearly one in every four people is unemployed. The Riverside-San Bernardino-Ontario area in California is still dealing with nearly 14% unemployment, while the 13.3% unemployment in Las Vegas is not only driving up foreclosures, but driving down traffic to its McCarran airport. Passenger numbers fell off 2.6% last year.

On the other side of the recovery, more than 210 cities are below the average U.S. rate and 65 areas dipped below 7%. If you’ve got a sweet gig at the University of Nebraska or have a steady buyer for your grain or corn-based ethanol, count yourself among the lucky residents of Lincoln, Neb., who aren’t part of the city’s absurdly low 4.1% unemployment rate. That’s still up from 3% just two years ago, however, and is only a hair better than the 4.2% rate in Bismarck, N.D.

It takes more than just a low unemployment rate in a small town to show the world you’ve weathered years of recession-fueled financial woes. With help from the Census Department, the Bureau of Labor Statistics and the Bureau of Economic Analysis, TheStreet found U.S. cities that not only withstood the economic downturn, but seemingly ignored it:

Austin, Texas

Reported GDP in 2009: $73 billion
Reported GDP today: $78.4 billion
Unemployment: 6.8%
Population change 2000-10: 20.4%

The locals want to keep Austin weird, and having a glut of jobs and a growing city definitely qualifies as weird during a period of financial turmoil. Heavy hitters such as Dell, the University of Texas, Whole Foods and Forestar Group have helped by doling out jobs, and newcomers such as Samsung have added to the city’s work force. But a town that’s staked its reputation on art-and-music-fueled funkiness seems to expand every time the South By Southwest music, technology and movie festival rolls through.

Washington, D.C.

Reported GDP in 2009: $366.6 billion
Reported GDP today: $407.5 billion
Unemployment: 5.8%
Population change 2000-10: 2.8%

With government jobs, lobbying and contracting gigs linked to those government jobs, a huge law community, a heavy tourist draw and the bolstering presence of universities such as Georgetown, George Washington, Howard and American and companies including Danaher and Pepco Holdings, D.C. and its surrounding areas were doing just fine before the recession. When the government decided the best way to upend that recession was to beat it over the head with money until it went away, that certainly didn’t hurt the city’s cause.

Augusta, Ga.

Reported GDP in 2009: $17 billion
Reported GDP today: $18.4 billion
Unemployment: 8.4%
Population change 2000-10: 0.3%

It’s not all of the sun-baked fellows in the galleries yelling “It’s in the hole” at the Masters Tournament or the tourists getting a taste of the city’s powerfully hot summers that have kept the city growing and its unemployment numbers on the wane since 2009. Instead, Augusta steeled itself against the recession in the best way a city can — by building its economy around a recession-proof industry. In Augusta’s case, the medical, biotech and military communities provided a stable base as the rest of Georgia crashed. The state’s unemployment mark still sits at 9.8%, above the national average, but a large medical community and an Army Signal Corps facility allowed Augusta to keep its cool.

Madison, Wis.

Reported GDP in 2009: $31.2 billion
Reported GDP today: $34.8 billion
Unemployment: 5.7%
Population change 2000-10: 11.6%

If that 5.7% unemployment rate looks enticing, you should have been in Madison during the recession in 2009, when unemployment was at 3.5%. That’s not a headline from The Onion, either, as the University of Wisconsin, the state government (protests and all) and the surrounding medical and biotech communities have largely shielded Madison from the recession’s effects. Companies such as Spectrum Brands seem fairly happy here as well, which has created a business base that makes Wisconsin grads slightly more inclined to stay.

Boulder, Colo.

Reported GDP in 2009: $16.2 billion
Reported GDP today: $17.6 billion
Unemployment: 6.9%
Population change 2000-10: 5.8%

The University of Colorado gets all the credit for keeping jobs around but, like Austin, Boulder’s hippie roots and artistic bent do a nice job of keeping the foot traffic moving and keeping the place just a little quirky. This helps spice up the job mix a bit by placing ad firm Crispin Porter + Bogusky, Celestial Seasonings tea and plastic sandal maker Crocs to the list of employers, but the area still relies heavily on scientific institutions such as the Center For Astrophysics and Space Astronomy, the National Oceanic and Atmospheric Administration and the Space Science Institute, as well as straitlaced companies including IBM, Lockheed Martin and Ball Aerospace & Technologies to keep the party going.

For Forbes’ list of the best cities for jobs, we ranked all 398 current metropolitan statistical areas, based on employment data from the Bureau of Labor Statistics reported from November 1999 to January 2011. Rankings are based on recent growth trends, mid-term growth and long-term growth and momentum. We also broke down rankings by size — small, medium and large — since regional economies differ markedly due to their scale.

Reflecting the importance of the war effort in stimulating local economies, command of this year’s best place for jobs was handed to the Army from the Marines. Killeen-Temple-Fort Hood, Texas, shot up to No. 1 from No. 4, while Jacksonville, N.C., last year’s first-place winner and home to Camp Lejeune, dropped to 19th place.

Once again the best places for jobs tended to be smaller communities where incremental improvements can have a relatively large impact. Eighteen of the top 20 cities on our list were either small (under 150,000 nonfarm jobs) or mid-sized areas (less than 450,000 jobs).

But no place displayed more vibrancy than Texas. The Lone Star State dominated the three size categories, with the No. 1 mid-sized city, El Paso (No. 3 overall, up 22 places from last year) and No.1 large metropolitan area Austin (No. 6 overall), joining Killeen-Temple-Fort Hood (the No. 1 small city) atop their respective lists.

Texas also produced three other of the top 10 smallest regions, including energy-dominated No. 4 Midland, which gained 41 places overall, and No. 10 Odessa, whose economy jumped a remarkable 57 places. It also added two other mid-size cities to its belt: No. 2 Corpus Christi and No. 4 McAllen-Edinburgh-Mission.

Whatever they are drinking in Texas, other states may want to imbibe. California — which boasted zero regions in the top 150 — is a prime example. Indeed, a group of California officials, led by Lt. Gov. Gavin Newsom, recently trekked to the Lone Star State to learn possible lessons about what drives job creation. Gov. Jerry Brown and others in California’s hierarchy may not be ready to listen, despite the fact that the city Brown formerly ran, Oakland, ranked absolute last, No. 65, among the big metros in our survey, two places behind perennial also-ran No. 63 Detroit-Livonia-Dearborn, Mich.

One lesson that green-centric California may have trouble learning is that, however attractive the long-term promise of alternative energy, fossil fuels pay the bills and create strong economies, at least for now. Even outside of Texas, oil capitals did well across the board, not surprising given the surging price of gas. Our No. 2 small metro, Bismarck, N.D., which also No. 2 overall, is the emerging capital of the expanding Dakota energy belt. Also faring well are Alaska’s two oil-fire cities, Fairbanks (No. 10 on our small list) and Anchorage (No. 3 on the medium-sized list).

There were some intriguing surprises as well. Most welcome are signs of revival from New Orleans-Metarie, La., which moved up a stunning 46 places to capture the No. 2 slot among our large metros. The region lost 11% of its population and nearly 16% of its jobs during the last decade. But now the Big Easy seems to be finding its place again among America’s great cities. Jobs, up 3.5% since 2006, have been created by rebuilding, a resurgence of tourism and a growing immigrant population — the region’s Hispanic population grew by 35,000 over the past decade.

There were other inspirational improvements this year. Sparked by a revival in manufacturing, a host of former sad sacks in parts of the Midwest are showing signs of definite improvement. Niles-Benton Harbor, Mich., a long-time denizen at the bottom of our list, shot up a remarkable 242 places this year to a respectable No. 121. Another old industrial city, Kokomo, Ind., ascended 177 places to No. 215, while Holland-Grand Haven, Mich., improved by 172 places to No. 221 and Grand Rapids, Mich., rose 167 places to No. 183. Milwaukee, a long-time loser among our largest metros, moved up by a healthy 163 places overall to a better-than-average No. 143.

The Northeast Corridor has also made strong progress. Here the likely explanation can be found in the fruits of Obamanomics. The stimulus has been particularly good for the vibrant economies surrounding the ever-expanding federal leviathan. Among the large metros, Washington-Arlington-Alexandria, Va., did best of all the cities outside the South, repeating its No. 6 ranking among large metro areas. Right behind, at No. 7 on the large city list, sits the primarily suburban Northern Virginia metro area, while Bethesda-Rockville-Frederick, Md., ranks 12th.

The other big East Coast winners are the financial and university-oriented economies, which have reaped huge benefits from the TARP bailout and the Obama administration’s college-centric stimulus plan. After the Texas cities and the imperial center, most of the best performing big metros are located in financial and university centers, including No. 9 New York City, No. 10 Philadelphia, No. 11 Pittsburgh, No. 13 Boston and No. 15 Raleigh-Cary, N.C.

So who’s losing? Outside of Oakland and the big Southern California metros — including No. 60 Los Angeles, No. 59 Sacramento, No. 58 Riverside-San Bernardino and No. 50 Santa Ana-Anaheim-Irvine — the bottom tier consisted of a motley crew of mid-South cities like Memphis (No. 64 on the big city list) and still-struggling, former big Sunbelt boomtowns Las Vegas (No. 62), West Palm Beach-Boynton Beach-Boca Raton, Fla. (No. 56), Ft. Lauderdale-Pompano Beach-Boynton Beach, Fla. (No. 54), Phoenix-Mesa-Glendale, Ariz. (No. 53), Atlanta-Sandy Springs-Marietta, Ga. (No. 52) and Tampa-St. Petersburg-Clearwater, Fla. (No. 51).

For the most part, these areas rose with the housing bubble and will not fully recover until the economy diversifies beyond real estate speculation. Already some of the bubble victims are showing signs of life, including No. 155 Merced, Calif., up 134 places, and No. 167 Orlando, Fla., which rode a revived interest in tourism to jump 89 places since last year.

While energy, America’s three wars, the recovering financial markets and real estate problems have played the lead role in setting the stage for the best places to do business, the Intermountain West has shown resilience with Salt Lake City, at No. 20 among large cities; Provo-Orem, Utah, Ogden-Clearfield, Utah, and Boulder, Colo., at Nos. 10, 25 and 26, respectively, among mid-sized cities; and Logan, Utah, and Fort Collins, Colo., at Nos. 9 and 38 among small cities.

As America struggles with a weak economic recovery, opportunities abound across the geography of the states — even in places where it seems bleakest like California, Nevada and Florida. If old industrial areas can stage the glimmers of a comeback, along with over-taxed and over-regulated Gotham, and greater New Orleans can rise from the near dead, these areas, with generally newer infrastructure and attractive climates, might be next to experience a resurgence of their own.

According to the National Association of Home Builders, this “pent-up demand” for new homes is expected to increase only slightly in the coming months, but the new homes to enter the market will be tailor-made to fit Americans’ changing needs and desires in the post-recession years.

“What’s driving it all is affordability,” says John McIlwain, senior fellow for housing at the Urban Land Institute in Washington, D.C., who notes that high unemployment, credit and student loan debt, stricter mortgage rules and a surplus of foreclosed homes will likely continue to scare many first-time buyers from the housing market and keep new home construction relatively slow.

The McMansion home of pre-recession years is on the way out, but a quality home with “well-designed bones” that is relatively inexpensive to operate has become more desirable, says McIlwain.

MainStreet talked to homebuilding experts to learn more about some of the key features home shoppers can expect to find in the new American home this year. Read on to learn all about the modern-day dream home and what not to expect on your house-hunting adventures.

Utility & Value

Homebuilders will continue to scale back on luxury add-ons, which are becoming more of an afterthought, says McIlwain, as homebuyers opt for a more modest and functional home, rather than a McMansion with a Jacuzzi and a heated pool.

“People are looking for shelter and value,” says Stephen Mellman, director of economic services for the National Association of Home Builders in Washington, D.C. “Everyone has their own lifestyle and they want to find a home to enhance their lifestyle and make it more efficient.”

Also with affordability still a huge factor for homebuyers, buying a new home no longer entails “doing fancy things” just for the sake of making a boom era statement, nor does it mean sinking the greater chunk of your cash into a long-term investment, as “the likelihood that that house value will appreciate is extraordinarily remote,” notes McIlwain.

The most noteworthy trend this year is that homebuyers are beginning to see their home as an extension of their lifestyle, whether that means making a strategic move from the suburbs for a shorter commute, having more proximity to downtown hotspots or finding a way to downsize after the children have flown the coop.

“This is shelter,” Mellman agrees, “it isn’t just an investment to sell in a year; you’re going to live here and raise your kids here and that colors everything: how you design it and what you’ll enjoy.”

Fuss-Free Kitchens

Whether your lifestyle is fast-paced or decidedly more conservative, Americans are spending more time in the kitchen and less in the formal dining room, which is starting to disappear. The reasons behind this shift vary from more Americans deciding to cook their own dinner to save on the costs of eating out or our increasing dependence on a usable kitchen that can entertain family and friends. As a result, spacious, eat-in kitchens that open up to the common room are now a huge trend for homebuilders in 2011, and the dining room, once its own separate space, is now simply designated by a table and chandelier, as people “try to do more with less,” says Mellman.

“You want an open kitchen because when you’re doing the cooking and entertaining, everybody gathers in the kitchen,” McIlwain says, noting Americans’ casual lifestyle and our ongoing obsession with food. “You don’t have a maid in the kitchen, but [when you’re cooking] you want to be part of the action. Cooking has become part of the whole entertainment process. And for couples, cooking together is a team sport, rather than an individual sport.”

But despite being the center of attention, the new American home’s kitchen doesn’t look quite as glamorous as it used to.

“The gourmet kitchen is on the way out,” says Mellman. “You don’t need eight burners” or a Vulcan stove, Mellman says. Americans post-recession are focused on standard appliances that they know they will use every day.

“A great stove, a fridge with an ice-maker and water filters, two sinks, a quiet wash dishwasher, or the equivalent—it doesn’t have to be commercial kitchen grade, but a decent quality kitchen that’s easy to move around in, and therefore cook in, with plenty of counter space and that’s easy to hang out in” is where the homebuilding trend is going, McIlwain says.

To save on kitchen construction costs, Dan Sandoval, a homebuilder with Republic Homebuilders in Fredericksburg, Va., says homebuyers are also forgoing traditionally pricey granite countertops for standard laminate countertops.

“Five years ago, they wouldn’t have sold, but now they’re OK,” he says of the materials. “It’s nice-looking, but very affordable,” unlike the dining room, which buyers now consider “wasted space” and an unattractive feature, says Sandoval.

“What I hear from customers is that they just don’t use it,” he says. “They don’t eat in there every Sunday, like their parents used to do. That’s not their lifestyle.”

Smaller Square Footage

It isn’t your imagination—the new American homes are actually getting smaller, according to a National Association of Home Builders’ report, The New Home in 2015.

In it, the NAHB found that the average size of single-family homes completed in 2009 dropped to 2,438 square feet, and in the first half of 2010, the average size of new homes completed continued its slide, dropping to 2,378 square feet.

What’s more, according to the NAHB study, bedrooms and baths have also downsized as well, as the share of single-family homes with four bedrooms or more has declined for three consecutive years, from 39% in 2005 and 2006 to 35% in the first half of 2010, and most new homes completed in 2008 and 2009 had either 2 or 2.5 baths (68%).

So what’s the story behind all these shrinking homes? “New homes that are being built by and large are tending to be smaller because that makes them more affordable,” explains McIlwain, who adds that “even the very wealthy will buy a home much smaller than they could afford,” just to cut back on living costs or perhaps to funnel their money into retirement savings and other mid-life goals.

As a result, certain rooms, like the formal dining room and traditional living room, are becoming extinct species or taking new forms in the combination spaces that are beginning to crop up, such as the eat-in kitchen and dining area, or the second or third bedroom, which has begun to do double-duty as a home office, McIlwain says. “Whether they’re working at home or having a room to keep personal information, such as taxes, an in-home office is more to take care of personal matters,” adds Sandoval.

Meanwhile, Mellman says stairways are moving from their traditional post in the front of the house, or entrance/foyer, to the back and the side, in yet another effort by homebuilders to curtail construction costs and provide more room.

Energy-Efficient Materials

EnergyStar homes have become the gold standard, but homebuyers remain hesitant to splurge on solar roofs or eco-friendly siding, says Mellman.

“Some of my customers inquire about those systems, but they don’t see the return on it,” Sandoval explains about pricey green add-ons. “It’s too costly at this time. Unfortunately, a lot of our customers have lost a lot of their retirement in the stock market, and they’re just trying to get a basic house to last them in their retirement. They would love to have those sorts of things, but they have to think of the costs.”

Tax breaks also play a role, and the lack of them in Virginia makes them even less appealing for prospective homebuyers, says Sandoval. Adds Mellman: “People want to have a green home and incorporate those features, but to a certain extent they’re not going to stretch themselves to get those things. Also, appraisers weren’t including those things for awhile, so a home would sell for less than its actual value and the cost of construction.”

Still, energy-efficiency has become a mainstay for empty-nesters looking to cut down the costs of heating and cooling a home, while other amenities, like EnergyStar windows, are becoming more commonplace and widely embraced.

“Green is no longer an amenity,” says McIlwain. “EnergyStar, EnergyStar windows, very efficient HVAC systems, siding to take advantage of solar power—those are the homes that are selling and they’re becoming the standard. They’re materials you’ve got be attuned to.”

1. Jobs. Housing follows jobs. Period. And while the job market is still slow or non-existent in many areas (nationally as well as regionally), we all know Austin continues to be the leading market in the nation for job growth. 

2. Jobs. At the risk of being redundant, housing follows jobs. Consumer confidence is close to reaching last spring’s high point, the most optimistic the U.S. has felt since 2008. Consumer confidence index for Texas is 89.7, highest it has been since May and up 38.2% from 12 months ago. The U.S. is up 6.9% in the same time period. And while hiring hasn’t restarted in earnest, firing has slowed to a drip. If you haven’t been fired, chances are your job is reasonably secure. Job security drives optimism, planning for the future and home buying.

3. Pent-up demand among young adults. Consider the echo boomers blight (baby boomers kids): 2006 college grads entered the labor market just as home prices began to collapse. Those who still have a job kicked and scratched their way through the Great Recession and are now 27 to 30, perhaps married or getting there and kids may be on the horizon. Some were even smart enough to save some money. According to economists, census bureau, etc., today’s young adults are under-represented as homeowners compared to historical norms, and a disproportionately large chunk lives at home. As the job market crawls back to life, this trend is likely to reverse. And if the apartment market’s strong performance in 2010 is any indication, it already has.

4. Inflation. While much is made of inflation in the media presently, most media (as well as consumers) don’t actually understand it and have been taught to fear it. Inflation expectations, not inflation, are what we should be worried about. Things get scary when consumers start believing that prices are rising, or are about to rise. Just like when rates began creeping up in Oct 2010, we saw a flurry of activity then it slowed. With most consumers, rational economic actions take hold, and rather than filling their tanks when empty, drivers fill whenever they pass a gas station. The expectation of higher prices, not higher prices themselves, is what changes economic actions. Rising inflation expectations pull demand forward, pushing up prices in an inconvenient self-fulfilling prophesy. Historically, real estate has been a rather good hedge against inflation. As people start to get nervous about inflation, they buy real estate. What is the saying? …Buy low, sell high! 

5. Higher rents and low interest rates. Ask a prospective tenant in Austin how the apartment/single family home search is going and the response will not be pleasant. Rents are rising, inventory is down, and landlords are back in the driver’s seat. And despite a recent bounce, interest rates remain historically low. Higher rents and low interest rates push would-be renters towards buying, particularly in Austin.

6. The start of a booming apartment market. As stated in the last couple of weeks, investors are aggressively snatching up multifamily properties as positive signs (such as demographic trends, low interest rates, and perceived values) attract professional and amateur buyers alike. Homeownership is at a 10-year low, young adults are moving out of their parents’ basements and into apartments, and leverage is fantastically cheap. What more could an apartment buyer want? The multifamily space typically recovers first, and if history is rhyming in even the smallest way, this is good news for housing.

7. Investment appetite remains strong. What should you look for?

• A low valuation
  • Lowest valuation in at least a generation
  • Forced Sellers
• A larger than normal number of distressed transactions in that asset class.
  • Distressed opportunities
    • Across all types of real estate — they have come to market slower than expected, which means buyers have had more time to hit the pavement and raise money. With limited opportunities, competing buyers are driving up prices of distressed assets: For every well-priced foreclosure there are a dozen all-cash buyers looking for a deal.
• Attractive financing available
  • High LTV, low rate, fixed rate, long term debt, preferably without pre payment penalty
• Favorable short term supply dynamics
  • Short term oversupplied market, but long term supply is controlled
• Favorable long term demand dynamics
• Demographically driven demand growth
• Favorable Tax treatment
  • 50%+ annual write-off
• Out of Favor
  • Currently, this is somewhat of a shunned/disgraced asset class. Not for long.

8. The stock market is doing well again. At the close of Thursday, the Dow Jones Industrial Average back above 12,000 and the S&P 500 Index topping 1,300 for the first time since mid-2008. IRAs, 401(k)s, and trading accounts are feeling fuller than they have in years. The wealth effect is in full effect as buyers look to sell stock for a down payment and the confidence to pull the trigger on a new home.

9. Confidence. Do you feel better or worse about the U.S. economy, and more importantly your own personal economy, than you did two years ago? This is not a political statement. Challenges remain, but we Americans are a resilient, optimistic bunch. Confidence is relative, and for a country that has been to economic hell and back since 2008, we are in remarkably better shape. Confidence in the present builds confidence in the future, and confidence of all types increases risk-taking activities. Confidence is on a positive trajectory, as we mentioned earlier, particularly in Texas and Austin. The fact that most people believe that we’re no longer headed for apocalyptic economic collapse is, as they say, a good thing.

There is not a better time to buy! The home you look at today will be more expensive this time next year!

After four straight years of declines, sales of million-dollar homes and condos rose last year in all 20 major metro areas, according to DataQuick Information Systems. On average, these cities saw an 18.6% jump in high-end home sales.

San Jose, Calif., had the biggest market for million-dollar homes, with a 27.4% spike in sales last year; Phoenix saw the smallest increase at just 0.4%.

Meanwhile, sales outside of this price point actually fell 2.8%.

“It hasn’t been a good six months for all people, but it was a good six months for rich people,” said Glenn Kelman, CEO of Seattle-based real estate brokerage Redfin. “When Wall Street goes up, rich people buy homes.”

And Wall Street has gone up: Stock values have nearly doubled from their March 2009 lows.

“Higher income households are feeling better about their financial security,” said Greg McBride, chief economist for Bankrate.com.

As their confidence soared, the wealthy took advantage of bargains in expensive homes. An average seaside manor on Jupiter Island, Fla., that might have sold for $4 million in 2006 cost less than $3 million last year. The Brentwood bungalow in L.A. was $1.5 million instead of $2 million, and that Scarsdale colonial fell to $1.1 million after gong for $1.5 million four years ago.

Getting a mortgage for these expensive homes was cheaper as well.

Normally buyers have to take out a jumbo loan to finance any mortgage beyond the $417,000 threshold ($729,000 in high-cost cities such as New York). These loans have higher interest rates because they are considered non-conforming — or higher risk — and are not backed Fannie Mae or Freddie Mac.

In 2009 buyers of high-end homes paid 1.8 percentage points more in interest than the average buyer. But in 2010, that spread had shrunk to just 0.6 points more.

That reduction would save about $780 a month on a million-dollar mortgage. That may not matter much when you’re a software gazillionaire, but for buyers stretching to reach that league, it can make a difference.

Some metro area markets experienced modest price rebounds in 2009, which was enough to push a handful of homes above the million-dollar threshold. In San Jose, for example, home values rose for several quarters, boosting the prices of homes right on the border of a million.

“You had some creep into the million-dollar bracket,” said broker Scott Kliewer with Windermere Silicon Valley.

But in most cities, the million-dollar homes sold were actually million-dollar homes, not just those that crossed into the high-end territory because of rising prices.

In New York, where volume grew nearly 25%, high-priced home sales were driven by bonuses on Wall Street. Even though bonuses were slightly smaller last year, they still topped $120,000. And that’s just the average; many employees brought home significantly more.

Wealthy clients have driven the business for Gary Reavis, the CEO of Keller Williams Hollywood Hills in Los Angeles, where sales rose about 20%.

He attributes the jump to the stock rebound and good times in some of the area’s best-paying industries, including entertainment.

And in Washington, government workers continued to bolster the high-end market, which grew 20% here as well. The DC area is now the best educated place in the nation and and one of the highest paid. Median family income is now over $101,000 in the D.C. area and more than $109,000 in the Bethesda-Rockville, Md., area.

Other big gainers were Honolulu (26%), San Diego (14%) and Nashville (13%).

The real estate industry may take some solace from the mini boom in high-end sales, but it does not necessarily mean good times are ahead for the rest of the market. In fact, the rest of the market is facing a potential 25% drop in prices and stalling sales.

Buffett gave an aggressive earnings forecast for Berkshire’s collection of businesses, said the company would engage in record capital spending and forecast a recovery in the housing market would start within a year.

Foremost, though, was his acknowledgment of the need for Berkshire to expand its non-insurance businesses, a broad collection that most prominently includes the railroad Burlington Northern and the electric utility MidAmerican.

“Our elephant gun has been reloaded, and my trigger finger is itchy,” Buffett said. The letter was released just before 8 a.m. EST Saturday, as it is in most years — and many large investors say they get up early that day to read it the moment it comes online.

The so-called “Oracle of Omaha” said Berkshire will need “more major acquisitions” — with an italicized emphasis on major — to meet its goal.

One long-time Berkshire investor described the letter as “punchy” and “confidently American,” among other things.

“I would say as an investor, I think it’s a very upbeat letter, it’s one that celebrates his courage on behalf of investors of going into the marketplace when the world was most fearful,” said Tom Russo, a partner at Gardner Russo & Gardner in Lancaster, Pennsylvania, who is one of the 15 largest holders of Berkshire Class A shares.

Buffett’s enthusiasm for America was obvious in the letter, not only in his capital spending plans but also in his outlook on the growth opportunities for his railroad, his utility business and the other companies Berkshire owns that are fundamentally exposed to the U.S. economy and consumer.

“Money will always flow toward opportunity, and there is an abundance of that in America,” he wrote.
Buffett tends to give an economic outlook in his letter and this year’s was no exception.

“A housing recovery will probably begin within a year or so,” he noted, which has led Berkshire to ramp up spending and acquisitions at its housing-related businesses.

He was less bullish on interest rates, which have been low enough to earn the company a “pittance” on its cash in recent times. Buffett said rates will eventually rise enough to contribute more normal growth to the company’s investment income, but it was “unlikely to come soon.”

INVESTMENTS

Another hit to the investment portfolio will come from the redemption of crisis-era preferred investments in Goldman Sachs and General Electric. Buffett said both are likely to be gone by year-end. The Goldman investment in particular famously pays Berkshire $15 every second.

All things being equal, Buffett forecast Berkshire’s “normal” earnings power at about $12 billion a year after-tax.

Some of that will come from dividends, particularly in large holdings like drinks giant Coca-Cola Co and bank Wells Fargo.

Wells has been hamstrung on its dividend payouts by post-crisis regulatory oversight, but Buffett said that should ease soon, leading to an increase of “several hundreds of millions of dollars” a year in dividend payments.

He forecast Coke would pay Berkshire dividends of $376 million this year, and he predicted that would double within another 10 years.

In the meantime, Buffett is spending on growth. He said Berkshire would make a record $8 billion in capital spending this year, with the $2 billion growth over last year to be spent entirely in the United States.

“Berkshire has created within itself its own outlet to redeploy capital,” Russo said. “The best thing about that is when you can by that spending create additional competitive advantage.”

That outlook could provide a boost to markets on Monday, as positive comments from Buffett’s investor letter have sometimes done in the past.

SUCCESSION

Buffett addressed the hot-button succession issue in the 26-page letter, something investors had anticipated given his age, 80, and the lack of a clear replacement.

Investment manager Todd Combs, hired late last year, will manage an initial portfolio of $1 billion to $3 billion, Buffett said, and Berkshire may add another one or two managers over time alongside him.

But Buffett said he will continue to manage the bulk of the portfolio while he is CEO. Berkshire’s equity holdings topped $52 billion at year-end.

He said less in the letter about who might follow him as chief executive of the company, though he said there were a number of good candidates. The most frequently tipped is David Sokol, chairman of MidAmerican and private jet service NetJets, who Buffett praised.

Today’s homebuyers are recession-weary, looking toward retirement, and/or increasingly more energy-conscious. Because of that, homes built in the next few years are likely to focus more on efficiency and community than on square footage, industry experts say.

Think compact, more energy-efficient and more affordable. Expect to see homes built on smaller lots in neighborhoods with walking trails and dedicated open spaces.

These are the findings of a survey of 238 builders, architects, manufacturers and designers. Results from the National Association of Home Builders’ survey were presented at the trade group’s annual International Builders’ Show held in Orlando, Fla., in January.

More than 47,000 construction industry professionals from Texas and around the world attended this year’s event, which is one of the largest residential construction industry shows in the United States. Attendees were invited to sit in on any of the nearly 225 educational sessions that covered topics such as “Effective Green Building and Design” and “Top 10 Technology Trends.”

Despite this being the smallest show in years, more than 1,100 exhibitors showed off building materials and products, and several demonstration homes were open for tours.

Many of the products, as well as the latest construction and design ideas showcased during the convention, are likely to be adopted by builders, which means homebuyers might see them in new homes in the future.

Austin builder Ray Tonjes, who attended the show, says talking to builders from Florida and other parts of the country made him thankful to be in Austin. “We’re quite fortunate in Texas, in general, and in Austin specifically,” he says. “Austin is one of the brightest spots in the housing markets in the country.”

Here are some of the highlights from the builders’ show.

Focus on efficiency

Rose Quint, who is the association’s assistant vice president of Survey Research, Economics and Housing Policy Group, presented findings from the association’s consumer preferences survey. She said that the current trend of building smaller homes might turn out to be a temporary reaction to the recession — or the trend might have staying power for several reasons: Homeowners are concerned about energy costs; the empty nesters will want less space; and the younger generation of home buyers is more energy-conscious.

Quint said that in 2015, the average size of a new home is expected to be between 2,000 and 2,399 square feet. The living room will have vanished or merged with another living space, and the house likely will have low-E windows, water-efficient features and an Energy Star rating.

More than half of survey participants said that this year they plan to build smaller homes and lower-priced models than in 2010.

This fits in with what today’s homebuyers want, according to a survey of 2,000 consumers conducted by Better Homes and Gardens magazine.

Among the consumers’ priorities are affordability and energy-efficiency, said the magazine’s editorial director Jill Waage during the builders’ show presentation.

She said consumers are once again allowing themselves to dream about their next home and/or looking for ways to make their current home reflect their needs, but before committing themselves to spending money, they are doing plenty of research to get the biggest value for their dollar.

At the top of their wish list are storage space and a separate laundry room. About 80 percent of survey respondents said they wanted more storage such as a walk-in master closet or a mudroom with cubbies. Respondents wanted a laundry room that is adjacent to living space, possibly serving a dual function as a pantry or office/craft space.

Also among the top-ranked features chosen by consumers are a home office or work space (67 percent); an outdoor living space (67 percent); a second suite for guests or parents (65 percent) and an everyday eating space (64 percent).

Waage said 52 percent of surveyed consumers said they want a “living core” or great room that consists of a kitchen, living and dining space. They also want wired spaces for playing games and doing homework, and they like functional “pockets of space” such as a computer niche, a reading nook or window seat and a banquette in the kitchen.

It’s an age thing

But at least one group of potential home buyers has a different view of the American Dream than previous generations. Generation Y — also known as the Millennials — likely will have a huge impact on what new homes look like in the future, said Mitch Levinson, managing partner of public relations firm mRelevance.

Levinson said during his presentation at the builders’ show that Gen Y, people born in about the late ’70s to the late ’90s, celebrates diversity and individualism.

“They’re optimistically realistic,” he said, and they are buying homes earlier than Generation X did. They want to live close to friends, family and an urban environment.

Joe Stoddard of Mountain Consulting Group said Gen Y house hunters want smaller homes on smaller lots and lots of amenities. They prefer condominiums in an urban or “urban light” setting and/or mixed-use communities with walkable town centers.

As illustrated in the Austin housing market, the Riverside Grove condos are likely to appeal to Gen Y homebuyers, says Austin real estate agent Garry Wise.

The community, which is about 10 minutes east of downtown on Grove Boulevard near East Riverside Drive, features pecan trees, a hike-and-bike trail, a pool and fitness center. The two-story residences offer three floor plans with one, two and three bedrooms, from 585 square feet to 1,415 square feet. Prices range from about $129,000 to $185,000.

The Gen Y buyers are not looking for the typical three-bedroom, two-bathroom suburban home, says Wise, vice president of sales at the Goodlife Team. They want a low-cost, low-maintenance home near an urban environment.

The townhouse-style condos at Riverside Grove appeal to Gen Y buyers for several reasons, Wise says. They are well-priced, with an open floor plan and eco-friendly features.

“The utility bills are averaging about $35 a month for a townhouse because they’re so well insulated,” Wise says.

Levinson said during his presentation to builders in Orlando that “the Millenials work all the time.”

So they also appreciate live-work spaces, which are designed for residents who have a home-based business.

A condominium building near downtown Austin, 904 West, is likely to appeal to Gen Y buyers as well. The community on West Avenue offers buyers an alternative to high-rise living. About a third of the units are live-work condos. The mixed-use building showcases distinctive features by Charles Fisk Architecture and green elements such as photovoltaic systems for each of the units. Plus, the condos are within walking distance of a variety of local shops, restaurants and entertainment venues. Unit 201 is for sale for $326,900. The 891-square-foot condo has one bedroom and one bathroom. Unit 209 is a 765-square-foot, one-bedroom condo listed for $285,700. Unit 107 offers 555 square feet for $191,200. The community has a gated building, assigned parking spaces and a pool.

Local firm takes home five awards form builders’ show

An Austin home designed with a mix of modern, rustic and sustainable materials earned five awards for its trendsetting design during the International Builders’ Show.

Winners of the National Association of Home Builders’ annual Best in American Living Awards represent cutting-edge design trends that are shaping today’s housing market.

Austin architect Luis Jauregui, who designed and built the award-winning home in the Spanish Oaks community, says the home got noticed for its “successful combination of classic and contemporary” styles.

The home, which already had received a five-star rating from Austin Energy’s Green Building program, is a “less stuffy,” more modern take on a classic Spanish style, Jauregui says.

Contemporary architecture is gaining inroads in Austin’s more traditional housing landscape, Jauregui says, but “for some people, going all modern — it’s just not for them. They prefer to have a more transitional style. I feel this house is a successful combination of classic and contemporary. I feel that is the trend today. I feel that is why the home did so well.”

The 9,085-square-foot home at 12025 Kirkland Court is on the market for $3.95 million.

The five-bedroom house features 2,500 square feet of covered terraces, an exercise room, a two-story library, a wine room and a four-car garage with storage.

Jauregui also took home an award for a Houston home he designed and built with aging-in-place features, which he says is likely to be a trend in homes of the future as baby boomers head toward retirement.

Swimming pools. While some people may long to have a swimming pool, some buyers may dread having one. Swimming pools are hard to keep clean and maintain and they are a serious health hazard for unsupervised children and pets. If your property already has a pool, by all means, keep it in good condition for prospective buyers, but don’t put one in under the assumption that it will increase the chances of selling the house or getting more money for it. That is just unrealistic thinking, in most instances.

Over-renovating for your neighborhood. If by making some expensive renovations to your home you are creating a piece of property that will stick out like a sore thumb or drive its price well beyond other homes in that area, then you are making a huge mistake. People may only see the higher taxes they will be paying (since your home may get a higher assessment than other properties), the higher maintenance costs (such as a fancy landscaping may require), or the danger of being viewed as “pretentious” by their new neighbors.

Extensive landscaping. Chances are that the new owners will do their own landscaping. Why would they want to pay you extra money for putting in something that may appeal to you but not to them? You are better off just making sure that your grass is mowed, your bushes trimmed, and your leaves picked up.

High-end upgrades. These can include stainless steel appliances, imported tiles, fancy bath tubs, built-in Jacuzzis, hand-decorated wallpaper, Persian rugs, expensive light fixtures, etc. While some of these things may appeal to you personally, they may not impress potential buyers — in fact, they can sometimes be a turnoff. Most people want to personalize their own home. Also, by adding these things you may disrupt the home’s general décor, which most experts agree should be kept consistent throughout a home.

Wall-to-wall carpeting. You might be better off restoring a home’s wooden flooring. It is easier to cover a wooden floor than it is to rip out carpet. Either way, you can be sure that the new owner will make changes, regardless of what you do. For that reason, you are better off leaving what you have as it is. If you have carpet, let professionals give it a good, strong cleaning, making sure to treat any noticeable stains. If you have wood flooring, sand them down and give them a shiny coat.

Invisible improvements. While they may sound good on paper, don’t expect potential buyers to agree to a higher price because you went out to invest on new plumbing or a new HVAC unit for your home. In general, buyers are impressed by what they see, not what is hidden behind walls or kept in the basement. It is not that they would not appreciate having such a thing but that they might have preferred to have picked it out themselves. At any rate, they will probably feel entitled to these added frills in the same way buyers of new cars feel entitled to new tires, spotless upholstery, and a working CD player.

A refinished or well-decorated basement. While some people may be looking for homes that have this feature, even they may not be ready to pay more than the house should be worth (based on comparable houses) just because the basement is ready to be moved in to. Such a feature may help clinch a sale but it will probably not pay for itself.

Building or upgrading a deck. Decks are a great addition to a home but this is something that some people might want to tackle themselves and they may not like the design you picked out or the quality of the work put into it.

Patio frills. Some people think that they can get their money back if they invest on water fountains, fish ponds, awnings, gazebos, or a multi-purpose playground. These things may or may not impress a buyer and may even help clinch a sale (if you can find someone who shares your taste) but they will not generally increase the value of a home — at least not commensurate to what you spent on these “luxuries.”

The addition or expansion of a garage or carport.

While many people acknowledge that a garage can be very useful, this does not mean that they will necessarily pay more for a house just because the owner recently added a garage or carport to it. People will just assume that the addition benefited the owner as much as it may benefit them — in other words, it is not something that they will necessarily feel an obligation to make any extra compensation for.

A report from AustinTowers.net, a downtown Austin real estate blog, compiled MLS data from 25 downtown residential towers. The group tracked 168 sales last year, or about 50 percent more than in 2009. The average selling price last year was $294 per square foot, down from $296 per square foot in 2009. Units sold for an average $308 per square foot in 2008.

“With more than 2,000 new downtown condo units built downtown in the last decade, overcapacity and the real estate downturn threatened to depress condo prices” AustinTowers Editor Paul J. D’Arcy said.

“The 2010 sales results show that the market remains quite strong given the difficulties facing the broader real estate and mortgage markets.”

The report said the average price per unit sold downtown was $343,983 up from about $330,344 last year, but down from $345,856 in 2008. The average time to sell a condo was 100 days, a 12-day increase from 2009.

The latter half of the year was particularly active, the Austin Business Journal reported in November. In October, there were 30 closings for downtown condos, according to Travis County data confirmed by developers. Twenty-one of those were at the three latest high-profile condo buildings downtown: the Four Seasons Resinces, Spring Condominiums, and The Austonian.