New-home buyers continue to increase the amount they spend on options. Of course, as the options begin to add to the base price of the house, some buyers get nervous and pull back. When they figure they can pay for options over the life of a 30-year mortgage, the spending usually resumes.

Builders say low fixed mortgage rates over the last two years have provided as much of an impetus for spending as the tendency to focus on hearth and home after the terrorist attacks of September 2001.

What about worries about the economy and jobs?

People who buy new homes aren't afraid of losing their jobs tomorrow, otherwise they wouldn't be buying new homes.

And the fluctuations in interest rates over the last 10 months hasn't yet affected the number of bells and whistles that buyers are adding to their houses.

The National Association of Home Builders says the typical home buyer in the United States spends $5,000 to $7,500 in upgrades.

Move-up buyers, typically better off financially and looking for amenities they didn't have in their last houses, tend to go for plenty of options.

First-time new-home buyers are more sensitive to increases in mortgage interest rates, and concern about the size of monthly payments can lead them to put a brake on options.

For first-time buyers in the $200,000 price range, options run $2,000 to $2,500 -- the meat-and-potatoes stuff such as carpet padding, vinyl kitchen flooring, and stone fireplaces.

To bring all the options to one place, builders have come up with the design center.

The concept originated with Kaufmann & Broad of Los Angeles, the largest residential developer in the western United States. The idea was to create a one-stop-shopping opportunity for buyers, especially in areas where the developer was doing a lot of building.

At development sites, the sales personnel should focus attention on selling the house, not the options, builders say. When the displays are in the basement, and the salesperson is on duty upstairs, he or she shouldn’t leave potential buyers to explain carpet choices.

Design centers allow builders to display more of the options available, and in larger quantities.

One result is an increase in buyers opting for granite countertops, for example, since at the models, a builder usually has only enough room for a few small pieces of granite, so the buyer can’t see the possibilities.

But large framed pieces of granite in a variety of colors and styles line one wall of the kitchen display of the center, so buyers have a better idea how they will look.

Putting a large selection of options in one location has been greeted enthusiastically by manufacturers, who show up regularly with new brochures and new product pitches.

It also provides a look at what is capturing the consumer's imagination and what isn't.

A case in point: appliances as furniture.

In the late 1990s, cabinet manufacturers said consumers wanted their kitchens to look more like a collection of expensive furniture, so they began offering such pieces.

In response, appliance manufacturers came up with wooden fronts for dishwashers and refrigerators, to hide them. Yet stainless-steel appliances continue to dominate the market.

Gone, too, are white cabinets in favor of natural woods such as maple and cherry. Slide-in ranges also are out, with buyers willing to go the wall-oven/cooktop route to avoid them.

How an option is priced depends on the item and the going rate. Builders see what others are doing, consider the cost of overhead and supervision, then figure in a 10 percent profit.

If a subcontractor is involved -- say, for flooring and carpeting -- the subcontractor sets the price with the home buyer.

If the house is not a custom job, and the buyer wants something special, and the builder has to pull workers from other jobs to complete the task, the buyer could see a 40 percent markup.

Over time, options change.

Some become standard features as demand grows. Over the last several years, for example, buyers' preferences have raised ceiling heights to nine feet from eight.

These higher ceilings have allowed builders to offer 42-inch cabinets as standard features in kitchens -- a change from the 36-inch-high cabinets standard in the 1980s and early 1990s.

Fireplaces can be a standard feature or an option, depending on the community. In some, a wood-burning fireplace will be standard, while a direct-vent gas fireplace is optional.

Published: February 5, 2004

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