In these times, less offers more

Smaller may be better in Europe and Japan, but in Texas?

We've been livin' large for so long that it seems like a birthright. With giant pickups and SUVs, and cavernous houses in never-ending suburbs, we love to say that everything's bigger in Texas.

That brag used to sound self-centered, maybe a little selfish. Today it seems downright foolish, with oil selling for more than $130 a barrel and electric bills about to go through the roof.

The era of cheap oil is over, and that poses a challenge for our region, because it fueled the rapid growth in the Sun Belt and helped Dallas-Fort Worth become the country's top job machine.

How to deal with the new reality?

Top employers like American Airlines and General Motors are downsizing in a big way and revamping their business models. We're driving less, buying less gasoline and turning to smaller cars. And rail ridership is surging.

In theory, major shifts should be coming for housing, too, a cornerstone of the economy. New houses should get smaller, with more money devoted to energy efficiency rather than extra rooms. There should be a faster push on urban infill development, with denser units on smaller city lots.

So far, builders report no significant movement in that direction in North Texas, although they're waiting for it.

"I often say, 'If you live in a big house, the next one is going to be a small one,'" says Ron Formby, president of Antares Homes in Arlington and past president of the local and state builders associations.

Many examples of denser development are evident here, especially near downtown Fort Worth and downtown Dallas. But inventory levels for town homes around the central cores are unusually high, indicating that we may already have too much high-dollar product.

There's been a surprising increase in suburban town homes, says Ted Wilson of Residential Strategies, a real estate research firm, and they have much lower inventories. Many are along Texas 121, stretching from Hurst to McKinney.

But no sign yet of what Fortune magazine describes as the downsizing of the American home. A current article explains how KB Homes shrunk the size of new houses in Las Vegas from 3,600 square feet to 2,100 -- and managed to keep the same look.

The facades are nearly identical, but the depth of the new houses is cut almost in half, which allows the builder to slash the price by $200,000. Those moves are aimed at improving affordability for first-time buyers, which isn't much of a problem in Dallas-Fort Worth.

Here, it's operating costs that are worrisome. High property taxes and insurance rates are bad enough; now expenses for commuting, air conditioning and even water are rising fast.

Wilson says the big impact of pricier energy has been in outer-ring housing developments, historically the hottest markets for home starts.

"People are looking closely at the trade-offs and cost differential," Wilson says, noting that builders report a decline in buyer traffic in outlying communities.

Homes farther out have always cost less because buyers had to be compensated for the price and aggravation of commuting. But that expense is more significant now: Wilson estimates that a couple would spend an extra $300 a month for a 15-mile commute, and that translates into $50,000 of purchasing power on a home loan.

Builders say that more people are choosing to renovate existing homes and invest in energy-saving improvements like new windows and extra insulation. Wilson rehabbed a 50-year-old house, stripping it to the studs, and says he cut his monthly electric bill by 70 percent.

The question is whether builders can find an economical way to transform blocks of older homes in closer-in neighborhoods. That would work if denser development were permitted, but most cities want to replace one single-family home with another. That usually requires a luxury home or McMansion (to make up for the high lot price), and that means high operating costs.

An alternative is to build duplexes, four-plexes or planned developments with a blend of apartments, condos and single-family homes. Three years ago, Formby proposed an apartment project on a pair of 2-acre tracts on Center Street in downtown Arlington.

He said city officials simply didn't want that density, in part because it puts more stress on schools, police and other services. So while Arlington is trying to develop the area, the lot remains vacant.

"I'm just mowing it," Formby says.

In Waxahachie, he also faces resistance on a proposal for denser housing, with the same objection. Cities want single-family homes, with a high minimum square footage, a minimum roof pitch and a lot of brick.

Other building materials and designs could save money, use less electricity, look great and be affordable. But people have to be receptive to new thinking. He points to so-called new urbanism projects in Maryland, Florida and Memphis that have a mix of housing styles and shared green space -- and a waiting list to get in.

"I think that's coming," says George Roddy, whose Foreclosure Listing Service in Addison has reported an explosion in foreclosures in the past several years. "People are just barraged with all these increases in their cost of living, and they're saying they don't need so much space anymore.

"It's going to take a re-education," Roddy says, "and sometimes it takes something like an energy crisis to force a change."

Higher energy prices don't have to stymie growth in North Texas, especially with the boost from the Barnett Shale. But they'll force us to reform the way we grow, like it or not.