The Official Online Weekly Newspaper of NAHB
While consumers have emerged from the recession with a more cautious attitude to spending, research from NAHB and Better Homes and Gardens suggests that the conditions behind the moribund housing market of the past couple of years are beginning to thaw.
“Consumers are starting to give themselves permission to dream about a new home again, and for the first time in several years, actually are considering houses that are slightly larger than their existing homes,” said Jill Waage, executive director of home content for Better Homes and Gardens.
Even so, in both the outlook for this year and four years down the road, Rose Quint, NAHB’s assistant vice president for survey research, said that smaller homes with lower prices and more green features will be the predominant force in the marketplace.
As it did last year and the year before, the survey research on consumer preferences, which is presented annually at the NAHB International Builders’ Show, suggests that the severity of the recession has left an indelible mark on prospective home buyers, who have shifted their perspective on the housing they want and need.
NAHB findings from a survey of builders in December, Quint said, showed that 52% expect to build smaller homes this year, and 41% expect no change — the continuation of a period in which the industry has been downsizing its product.
Fifty-nine percent of the builders polled said that their models would be priced lower this year, with 34% reporting they expected to see no change.
According to data from the Census Bureau, the average size of new single-family homes completed declined to 2,377 square feet during the first three quarters of 2010, down from 2,438 for all of 2009. That was still far above the 1,500- to 1,600-average-square-foot home that characterized the early 1970s.
The downward direction was less discernible when looking at the average sizes of new homes that were started — data going back only to 2005 — which show a marginal climb from 2,367 square feet to 2,381 square feet between 2009 and the first three quarters of 2010. The gain in home prices was only registered in the South and Midwest, however, Quint said.
Other characteristics from the Census Bureau suggest a trend toward less spacious single-family homes. Of those completed during the first half of last year, 35% had four bedrooms or more, up one percentage point from 2009 but down from a peak of 39% in 2006. Twenty-four percent had three or more bathrooms, which was unchanged from the prior year but down from 28% in 2008. At 17%, the share of houses with at least a three-car garage was also flat for the first two quarters of 2010, but down from a peak of 20% in 2005.
The House of 2015
Looking ahead to 2015, 74% of the builders surveyed by NAHB toward the end of last year said that single-family homes will be smaller; 68% said they will be greener; and 29% expect them to have more features related to technology.
Builders expect homes to average 2,152 square feet in 2015, and 63% expect the average size to fall into the range of 2,000 to 2,399 square feet; that was up from 46% in a similar survey conducted in 2007.
Very much on the endangered list is the living room; 52% of builders expect it to be merged with other spaces in the home by 2015 and 30% said it will vanish entirely to save on square footage, Quint said.
“As an overall share of total floor space, 54% of builders said the family room is likely to increase,” said Quint, “the only area of the home likely to increase.”
Joining the living room, the relative size of the entry foyer and dining room are likely to be diminished by 2015. Opinions were fairly evenly divided on the fate of the kitchen, master bedroom and bath and mudroom, she said.
Features that are highly likely to be included in the average new home of 2015 include a great room comprised of the kitchen, foyer and living room; a walk-in closet in the master bedroom; a laundry room; ceiling fans; a master bedroom on the first floor in homes with two stories; and a two-car garage.
The most commonplace green features in 2015’s new homes include low-E windows; engineered wood beams, joists or tresses; water-efficient features such as dual-flush toilets or low-flow faucets; and an Energy Star rating for the whole house.
From a December survey of Better Homes and Garden readers who consider themselves prospective home buyers or who are planning a major improvement to their home, Waage indicated that consumers do have rising expectations for their next home, despite the financial constraints that persist.
Four out of 10 consumers stated that they are looking to increase their total home size with their next home, up from more than one-third in 2009, according to Waage.
“While they are looking at a large-size home, they aren’t looking for something significantly larger,” she said. “Rather, it is more of a desire for something slightly larger to accommodate their prioritized wish list. They are dreaming again, but their dreams are definitely reality based.”
Today’s prospective home buyers are looking for a median sized home of 1,914 square feet, compared to the 1,864 square feet in their current home. “They want more space,” she said, “but it is driven by both function and finances.”
Waage indicated that consumers have also changed their shopping habits. “Consumers are researching their projects much longer,” Waage said, “but they are acting more quickly in the final stages” once they have found a home where the timing and value are right.
Value is high on the list for housing consumers; 54.6% say it is important to get the most value for every dollar they spend, and 51.7% say they will spend time looking for bargains and deals in order to save money.
Overall, consumers don’t want any “wasted space” in their next home and are seeking real value for the dollar, Waage said.
She added that 58.4% said they would describe themselves completely as someone who is “reluctant to spend money I don’t have.”
Consumers are realizing there are no guarantees on the return in their investment, other than their own enjoyment of their new space. So they are careful not to overextend. “Their priority is having a home they enjoy,” she said. “The new mantra is I am spending my money, so make it count.”
The top-ranking features that consumers want in their next home include: high-efficiency heating and cooling, 89%; high-efficiency appliances, 85%; a deck or patio, 84%; a private backyard, 78%; and upgraded features and fixtures — such as granite countertops, wood flooring, faucets and lighting fixtures — 78%.
The top-ranked living spaces wanted in their next home include: a separate laundry room, 81%; additional storage space, walk-in closets or built-ins, 79%; a home office space, workspace or family computing center, 67%; an outdoor grilling and living area, 67%; at least one additional bedroom with a private bath, 65%; and everyday eating space in or close to the kitchen, 64%.
Looking at prospects for major home improvements, the Better Homes and Gardens research found that 25% of those surveyed in December agreed that now is the right time to spend, up from 16% in 2009. About 16% in the latest survey believed that it was not a good time to spend, less than half of the 38% who shared that opinion in 2009.