An unprecedented housing bust, which brought about the largest loss of home equity in history, has fostered fundamental attitudinal changes in new-home prospects.
These customers say that while the recession presents them with opportunities to get more house for their money, fewer are willing to spend beyond their means. The economic downturn also seems to be converting potential home buyers into homebodies; many say their lifestyles now revolve around spending more time with family.
They also contend that the quality of a community is at least as important to their buying decisions as the house within it or any of its “bells and whistles.” And at no time in the history of this country has consumer demand been as fervent for energy-efficient homes, not only to protect the environment but also to save money for their owners. The desire for a McMansion seems to have been supplanted by the desire for a more responsible home.
These are some of the main findings from our May 2009 “Builder/American Lives New-Home Shopper Survey” (PDF)conducted for Builder by American Lives (http://americanlives.com), a Carmel, Calif.–based market research firm, which polled more than 600 shoppers in eight states. The survey provides an intriguing snapshot of the changing perceptions of buyers about their homes and a glimpse at how builders need to rethink both their homes and their marketing to meet the new demands.
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What jumps out from the results is these customers weren’t just window shopping. Despite a still-fragile economy and trepidation about their employment, nearly three-fifths of the respondents said they thought it was an “okay,” “good,” or “excellent” time to buy a house.
While they concede there are still risks to purchasing a house, relatively few respondents—around 30 percent—are afraid to make a commitment to buy. Contrary to what economists and some builders continue to believe, only one in five respondents is waiting for the market to bottom out before buying; nearly three-fifths of the respondents said they’re back in the market because they are convinced they can get more house for their money now.
However, given that prices are still dropping in many areas of the country, these shoppers are definitely being more cautious. More than 36 percent said adamantly they wouldn’t stretch their budgets to get a good deal on a house. That makes sense, given that three-quarters of those surveyed are reining in their spending in general.
There will always be new-home buyers interested in only two things: size and price. That trend is certainly evident among the survey’s respondents, although a good number of shoppers have competing priorities this time around. One is to find a house that “fits their needs.” This was “very true” or “exactly how I feel” for more than 70 percent of respondents who identified themselves as first-time buyers.
Another priority is buying in the right neighborhood. Eighty-five percent of the respondents agreed “somewhat” or “strongly” with the suggestion that “community is just as important as the home.” More than half were willing to make the ultimate sacrifice; they’d be willing to accept a smaller house “in the neighborhood I want.”