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Returning Home Buyers Show a Shift in Preferences
With a wealth of statistical information in hand, a housing researcher and an expert in trends in home design appearing at last month’s International Builders’ Show in Las Vegas presented strong evidence that the severe downturns in housing and the economy now coming to an end have had a major impact on the features that prospective buyers are looking for in a new home.
Price will remain a primary concern for prospective buyers who are sheepishly returning to the marketplace, they said, and consumers will be poised to respond favorably to products and layouts that provide energy efficiency, home organization and comfort.
And while some of the harsh realities of the battered U.S. economy have conspicuously resulted in a significant downsizing trend in the residential sector, demographic factors — such as the aging of the population — are also expected to have major implications for consumer preferences in the period ahead, they indicated.
Rose Quint, NAHB’s assistant vice president for survey research, pointed to a number of downward trends in 2009 skewed by difficult conditions in the marketplace. Flat in 2008 at an average size of 2,520 square feet, single-family homes last year shrank to an average of 2,480 square feet.
NAHB surveying of builders in January suggested that the trend will continue. Of those surveyed, 95% said that they would be focusing on lower priced models this year and 96% said that they would be concentrating their efforts on building smaller homes.
Among other signs that builders have been scaling back, U.S. Census Bureau data showed that single-family homes with three bathrooms or more accounted for a 23% share of those completed during the first half of 2009, down from 25% in the previous year, Quint said, which was their first decline since 1992.
Homes with four or more bedrooms have been falling since 2007, she said, and dropped in the first two quarters of last year to a 33% share, down from a peak of 39% in 2006. Also peaking in 2006, homes with two stories or more headed down last year to just over half of the single-family homes completed.
The rising trend in garages for three or more cars has also come to an end, she observed, holding steady at about a 19% share since 2006 after rising steadily for almost 15 years.
Based on Census figures, new single-family homes averaged $267,000 during the first 11 months of 2009, down from $293,000 in 2008, she said. In both 2008 and 2009, 31% of the market was concentrated in the $200,000 to $299,999 price range, but homes priced below that level were gaining market share while those higher were declining.
Forty-five percent of the single-family homes sold last year were below $200,000, she said, compared to 38% the previous year. One quarter of the homes sold last year were priced above $300,000, compared to 31% in 2008.
In its surveying last month, NAHB also asked builders to identify the features they were most likely to include in the homes they build this year, on a scale of one, indicating not at all likely, to five, very likely.
The top 10 features, Quint said, were:
- Walk-in closet in the master bedroom (4.7)
- Laundry room (4.6)
- Insulated front door (4.5)
- Great room (4.5)
- Low-E windows (4.5)
- Linen closet (4.4)
- Programmable thermostat (4.2)
- Energy-efficient appliances and lighting (4.1)
- Separate shower and tub in the master bathroom (4.1)
- 9-foot-plus ceilings on the first floor (4.1)
The 10 features least likely to be included in homes built this year:
- Outdoor kitchen (1.5)
- Outdoor fireplace (1.6)
- Sunroom (1.8)
- Butler’s pantry (2.0)
- Media room (2.0)
- Desk in the kitchen (2.2)
- Two-story foyer (2.3)
- 8-foot ceilings on the first floor (2.3)
- Multiple shower heads in the master bedroom (2.5)
- A smaller kitchen area than in recent years (2.7)
In its survey research, Quint said that NAHB was especially interested in identifying the preferences of buyers who are 55 and older, a segment of the population that is growing significantly, largely as a result of the aging of the post-war baby boom generation. In 2000, those 65 and older represented 12.4% of the population, she said, and the size of that age segment will climb steadily, reaching a 20% share in 2040.
Among NAHB’s survey findings:
- 55+ buyers have a slightly greater propensity for living in a central city (9%) than all buyers (7%) or in a close-in suburb (32% vs. 30%) and find the outlying suburbs less desirable than the general population of home buyers (31% vs. 35%), she said. An equal share of 55+ and all buyers (28%) said they wanted to live in a rural area.
- All buyers and 55+ buyers currently live in homes of similar size (averaging 1,835 square feet and 1,886 square feet, respectively), but buyers in general would like to move up to a 2,354-square-foot home on average, while 55+ buyers aren’t looking for much difference in size from their current home, settling for an average of 1,903 square feet.
- Looking at the configuration of the kitchen-family room, 38% of 55+ buyers said they wanted a completely open arrangement (the same as all buyers), while 35% desired to have the room visually open but with a half wall (compared to 42% of all buyers), Quint said.
- Seventy-nine percent of 55+ buyers indicated a preference for a one-story home, compared to 52% of the overall housing market.
- Fifty-one percent of 55+ buyers wanted three bedrooms (compared to 39% for all buyers), 31% wanted one or two (9% for all buyers) and 18% said they would be looking for four or more (vs. 52% of all buyers).
- Sixty-nine percent of 55+ buyers want the master bedroom to be located on the first floor only (vs. 16% of all buyers) and 12% prefer the second floor only (compared to 52% of all buyers).
- One or two bathrooms is fine for 65% of 55+ buyers (vs. 39% for all buyers), but 36% want two and a half or more (vs. 61%).
- A one- or two-car garage is the preference of 57% of 55+ buyers and 56% of buyers in general. Twenty one percent of 55+ buyers said a carport for one or two vehicles would do (vs. 15% for all buyers) and 16% said they needed a garage big enough for three or more cars (vs. 28% for all).
- Over half of 55+ buyers want 9 feet or more of ceiling height on the first floor (vs. 69% for all buyers), but 45% would settle for 8 feet (vs. 29% for all).
- The most important designs and features for 55+ buyers include: a washer/dryer in the unit (90%), storage space (84%), windows that open easily (81%), a garage door opener (73%), an easy-to-use thermostat (73%), a master bedroom on the first floor (71%), a private patio (67%), a porch (66%), an attached garage (65%) and bigger bathrooms (64%).
- The 55+ buyer cares less than all buyers about: an island work area in the kitchen (42% would like to have one compared to 80% of the general home buying population), a separate shower enclosure (48% vs. 79%), a private toilet compartment (13% vs. 60%), a sun room (28% vs. 53%), a wood-burning fireplace (26% vs. 48%) and an exercise room (27% vs. 38%).
- The 55+ buyer cares more than all buyers about: bathroom aids such as grab bars (54% vs. 26% of all buyers), kitchen aids such as lower work surfaces (57% vs. 30%), a light home repair service (47% vs. 21%), outdoor maintenance service (52% vs. 29%), an entrance without steps (46% vs. 31%), accessible public transportation (34% vs. 20%), doorways that are wider than standard for accessibility (48% vs. 36%) and non-slip surfaces (52% vs. 47%).
- When it comes to technology features, 55+ buyers were fairly similar to the overall home buying market in their desire for a security system (55% vs. 57%), energy management (55% vs. 61%), structured wiring (53% vs. 42%) and lighting control (42% vs. 54%). However, they were less likely to want more expensive items such as a home theater (17% vs. 54%), distributed audio (13% vs. 50%) and home automation (17% vs. 45%).
- 55+ home buyers were a bit less concerned about the environment than home buyers on the whole. Sixty percent said they wanted an environmentally friendly home but would not pay more for it, compared to 70% of all buyers. Twenty-seven percent of the older buyers said they were not concerned about the environment (vs. 13% of all buyers). Twelve percent said they would pay more for an environmentally friendly home, compared to 17% of all buyers.
- On average, 55+ buyers said they were willing to pay 25% less than all buyers for their new home in order to have features that would reduce their annual utility costs by $1,000 — $6,732 vs. $8,964.
As the downsizing trend continues, Eliot Nusbaum, executive editor of Better Homes and Gardens, compiled information on features desired by his magazine’s readers who plan to purchase a home in the coming year. The results, showing the percentage of prospective buyers who would like each feature, were gathered from an extensive survey conducted in November.
Among the findings for priority items:
- A smaller home (36%)
- An energy-efficient HVAC system (76%)
- Energy Star appliances (70%)
- An efficient design (66%)
- More natural light (65%)
- Lots of storage (62%)
Relatively high on the wish list of potential home buyers were:
- A separate laundry (85%, up 5% from findings for a similar survey in 2008)
- An outdoor grilling and living area (68%)
- A kitchen with an eating area 67%)
- An extra bedroom with a bath (65%)
- A comfortable family gathering space (62%)
- A home office suitable for multiple tasks (59%)
- Improved home electronics (48%)
- A partially separated kitchen (42%)
- A large three-car garage (37%)
- A low-maintenance exterior (81%)
- A private backyard (80%)
- Low-maintenance landscaping (70%)
Less important to prospective home buyers were:
- Proximity to downtown (29%)
- A master suite like a great hotel room (29%)
- Deluxe bath finishes (24%)
- Deluxe kitchen finishes (20%)
In its November survey, Better Homes and Gardens also included readers who were considering undertaking remodeling projects, Nusbaum said. Of the readers who were surveyed, 16% said they thought that now was the right time to spend on remodeling and 38% said it wasn’t the right time. Fifty-two percent of the spenders are doing needed repairs and maintenance on their homes.
However, he said that savvy readers do realize that “this is the perfect time to put money into our home, which we plan to be in for many more years. We seem to be able to get betters deals on lumber and building materials. And we are expecting contractors’ time will loosen up due to so many people canceling jobs.”
“The focus is on smaller projects,” Nusbaum said, such as painting a room (54%), replacing or adding flooring and carpeting (38%) and decorating or redecorating a room (35%).
“The focus of future projects is on saving money,” he added, with those in the remodeling market looking at such practical considerations as low-maintenance landscaping (37%), Energy Star windows and doors (34%), high-efficiency heating and cooling systems (31%) and Energy Star appliances (31%).
Among remodeling trends identified from a copious amount of reader feedback each year, Nusbaum said that aging in place was the most significant. He cited findings from AARP that 83% of 65+ households say they expect to stay in their current home and noted that 60% of all home remodels today include age-related modifications.
Other remodeling trends include:
- Outdoor living, attained by the addition of decks and patios that bring indoor comforts outdoors
- Bonus spaces, through such projects as attic conversions and rethinking the use of existing spaces
- Using salvage that adds character and saves money
- Maximizing storage
- Adding character
- Green building
- White kitchens, in which “there is an astonishing amount of interest”
- Furniture-style cabinetry
- Stainless-steel appliances
- Specialty work stations, such as a space for baking in the kitchen
- Walk-in pantries, for which “there is a huge demand in the remodeling market”
- Televisions everywhere, including the kitchen and bathroom
- A save-and-splurge mentality, such as compensating for the cost of soapstone counters by painting existing cabinets
- Personal retreats
- Versatile vanities, “grand or modest, on the back wall of the master bath”
- A separate toilet area
A major long-term trend for the housing market overall, Quint said, is that a growing U.S. population will generate healthy demand for housing and that home builders will find increasing ethnic diversity among their customers.
In the coming three decades between 2010 and 2040, the nation’s population is projected to add almost 100 million people, more than three million a year on average.
 Web Site Is One-Stop Shop for Tax Credit Info
Builders and other industry professionals can help spur home sales by referring prospective home buyers to www.federalhousingtaxcredit.com. The NAHB Web site provides detailed information on both the extended $8,000 first-time home buyer tax credit and the new $6,500 repeat buyer tax credit recently signed into law by President Obama.
Consumers can use the Web site to find information on both tax credits — including frequently asked questions and links to social media sites that provide updated information as it becomes available. It also includes a number of home-buying resources for consumers.
Industry professionals are encouraged to highlight the tax credit Web site when marketing to their potential home buyer market.
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