Posted in Builders
What's Hot in Housing?
Housing markets across the country have been showing strong signs of a comeback with more and more buyers seeking newly built homes. As business starts to ramp up, knowing the flourishing markets and buyer trends can help builders better prepare their business for the industry turnaround.
Metrostudy, a Hanley Wood company, released its list of 2012 local housing leaders earlier this summer, revealing some of the nation’s hottest housing markets. Closings in the 50 largest markets increased by 11.9 percent over 2011 to 218,571. According to the data, four of the top five markets exceeded 10,000 closings, with the fifth market coming in close at 9,586.
The Houston/Sugarland/Baytown, Texas market topped the list for the sixth year in a row at 19,317 closings. The Dallas/Fort Worth/Arlington, Texas market came in second at 14,352 closings, followed by the Phoenix/Mesa/Glendale, Arizona market at 10,621 closings. The Washington/Arlington/Alexandria, D.C./Va./Md./W. Va. market came in fourth at 10,155 closings, with the New York/Northern New Jersey/Long Island, N.Y./N.H./Pa. market rounding out the top five at 9,586 closings. According to the 2013 National Association of Realtors Home Buyer and Seller Generational Trends data, eight out of ten recent buyers considered their home purchase a good financial decision.
As more consumers look to new construction, meeting those buyers’ wants has become increasingly important. Earlier this year, the NAHB released What Home Buyers Really Want, a report aimed at providing the most current and accurate information on homebuyer preferences.
In an interview with Engineered Wood, Rose Quint, the assistant vice president for survey research and economics and housing policy for the NAHB said, “Our data has been very well received by our industry. Builders, manufacturers, and marketers are all looking to understand this data and see how they can adapt to homebuyers’ wants. We conducted the study in such a way that it’s representative of all homebuyers in the country.”
The good news for builders? According to the survey, over half of all homebuyers would like to buy a brand new home, most expecting to invest about $203,900.
Surprisingly, although average home sizes have continued to rise since the recession, reaching 2,524 square feet in 2012, the survey revealed that buyers want a home with a median 2,226 square feet. That’s about 17 percent bigger than their current square footage, but it’s less than the square footage of newly built homes last year. The NAHB suggests that the tighter lending requirements in 2012 kept many buyers out of the market who would otherwise want to purchase new homes, limiting new construction to wealthier buyers with greater access to credit.
But according to Quint, the data showed even more significant trends when it comes to what homebuyers really want in new homes.
“Two things jump out immediately when you look at the ‘most wanted list.’ First, homebuyers are very interested in energy efficiency in their homes,” Quint said. “The other thread we saw in the data was that homeowners want help with storage to keep their homes organized.”
Survey participants were asked to rate a list of over 120 home features as “essential/must have,” “desirable,” “indifferent,” or “do not want.” The most-wanted feature list includes four energy-related features in the top ten, including ENERGY STAR rated appliances, an ENERGY STAR rating for the whole home, ENERGY STAR rated windows, and ceiling fans to help keep cooling costs down.
The survey also presented participants with tradeoff questions to reveal what options they would prefer in a home. When considering energy efficiency, 9 out of 10 buyers would choose a highly energy-efficient home with lower utility bills rather than one costing 2–3 percent less without those features. Of those surveyed, 73 percent agreed that projected utility costs would influence their purchase decision. In fact, homebuyers reported that they were willing to pay an additional average of $7,095 for a home if it would save them $1,000 annually on utility costs.
Further, according to the 2013 National Association of Realtors Home Buyer and Seller Generational Trends report, younger buyers placed a higher importance on commuting costs than older generations, who focused on a home’s energy-efficient features and living in an environmentally friendly community.
The most-wanted list also revealed a desire for organization in the home. “That’s why you see a laundry room at the very top, second in the most-wanted list. You will also find garage storage, a walk-in pantry, and a bathroom linen closet on the list, all related to keeping the home organized and stuff stored appropriately,” Quint said.
In fact, the laundry room is not just desirable, as 57 percent of those surveyed said they would not buy a home without one.
The survey also highlighted a number of other key findings in homebuying preferences. For 65 percent of buyers, the most influential characteristic when buying a home is the need for appropriate living space for the buyer, in terms of size and number of rooms.
As buyers look to purchasing new homes, how do they find a builder? According to the survey, word of mouth remains the best source of leads as 70 percent of buyers rely on referrals from friends, family members, neighbors or acquaintances when choosing a contractor. For buyers selecting a contractor, the most important attribute is a reputation for quality construction.
For a snapshot of these trends and more, check out our infographic. To purchase a copy of What Home Buyers Really Want, visit ebooks.builderbooks.com.
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