 Pity the poor homebuilder. Trying to determine what tomorrow’s homebuyers want in their next home is tricky. That’s because preferences change as buyers age. Lifestyles change and so do customer expectations of price, quality, customizing options, floor plans, location, and a host of other amenities.
A smaller percentage of new homes today are bought by first-time buyers. In 1985, 32% of new homes were purchased by first-timers; in 2001, it was down to 26%. In other words, many new homes are being purchased by move-up buyers.
Today’s buyers have more money to spend – if the household has two wage earners. In the last 30 years, two-earner households increased their average annual income from almost $44,200 to more than $66,150. Meanwhile, single-earner household income remained virtually unchanged. Both sets of numbers may be why homebuyers say “price” is the single most important factor in purchasing a new home today.
In a 2002 study by the National Association of Home Builders (NAHB), 41% of buyers said price is their most important consideration in a home purchase. Location is second with 39%. Eleven percent rate home amenities as most important, while proximity to work (2%) and school (1%) follow.
When it comes to the most important community amenity, you might be surprised to learn that buyers rate “highway access” highest. Forty-four percent say it is important to very important. Walking, jogging, and bike trails are the second most-preferred amenity. Rounding out the top 10 sought-after community amenities are: sidewalks on both sides of the street, parks, playgrounds, shops within walking distance, a lake, nearness to public transportation, day care center, and business center.
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When current owners are ready to buy another home, what will they want to change most? The space between houses. Sixty-two percent say that’s important or very important in any future purchase decision. Does that spell the end to zero-lot-line homes? Not at all. Homebuyers will trade one amenity for another. For example, some may give up a larger lot to save an hour commuting to work. Still, they will long for the bigger lot.
“Less traffic in the neighborhood” is the next most-cited change owners want in their next home. Other top-10, sought-after features next time around: lower property taxes, bigger home, bigger lot, better schools, a “good” neighborhood, less development, farther from the city, and more luxury features. Much has been written about so-called “green” building — that is, environmentally friendly homes. But results of the NAHB study make it apparent green builders won’t be in the majority any time soon. Thirty-five percent of survey respondents say they want an environmentally friendly home, but they are not willing to pay more for it. Only 14% say they will pay more for a green home.
The economic boom of the past couple of years has been great for home builders. They are selling homes as fast as they can build them. They really didn’t have to worry much about the buyer’s wants and needs.
Sooner or later the building spree will slow. When it does, builders will be well advised to study their market carefully. By building something special or not available currently in their market, they will ensure a steady stream of prospects to their model homes for years to come.
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