By Christina B. Farnsworth. Second in a three-part series examining what motivates new-home buyers vs. what builders and contractors think motivates them.

Part One: The Weakest Link

Part Three: The Right Stuff

Builders can't help themselves. They want to tell you in intricate detail how they build a better home than the next builder. Their sales and marketing people pick up on this story line and pass the information on to sales prospects.

But do most buyers really care whether the home they buy is built with better lumber, extra bracing, or higher grade of vinyl siding? Will that be enough to convince them to plop down a big down payment on the biggest purchase of their life? Probably not.

BUILDER surveyed 507 new- and 502 used-home buyers (with the Joint Center for Housing Studies at Harvard) last year as part of our Housing Continuum research project. We found that both buyer segments shop all available choices before making a purchase. Our homeowners had all purchased between August 2000 and December 2001. So they'd had some time to think about their purchase.

A minority of people look just at new or just at existing homes. In fact, well over half of home prospects shop both new and used before they buy, no matter which way they ultimately go. The challenge for the new-home industry is convincing prospects who could go either way to buy new. Sales consultant and speaker Nicki Joy emphatically reminds those in real estate sales that "for every new home sold there are four or five resales." That's some serious competition.

And what's the new-home feature to which prospects pay keenest attention? It's not the frame, fit and finish, or foundation. Buyers choose new to avoid maintenance. They don't want to spend weekends scouring hardware stores for faucet seats. They don't want emergencies like the hot water heater emptying all over the basement floor. They don't want to drop $10,000 on a new roof.

Even so, Rockville, Md.-based Joy says that she has yet to hear builder sales associates ask prospects if they are also looking at used homes. Nor does she hear them tout the features that reduce or eliminate maintenance in new homes. If those sales associates did ask the questions, and the shoppers said "Yes," sales-coach Joy can quickly come up with nine good reasons those buyers should think again about new. Read on to see her list.

Joy's message: Don't let your daily focus on new homes blind you to the fact that it's one big housing market out there. Prospects weigh buying a new home against buying an existing home in established communities or even remodeling their current home. We distilled five major take-aways for builders from the Continuum survey findings that dealt with new versus existing housing. Here they are.

Shoulda, Woulda, Coulda

1. Most sales prospects weigh new vs. existing homes.

Almost half of the people who bought existing homes checked out new homes before going used. What about the "the ones who got away?" What tilted them in favor of a used home?

The answer in one word: location. Forty percent wanted to buy a home in a particular neighborhood, where the schools are good, where shopping is close by, or where their friends live. Another 11 percent were drawn by mature landscaping. Eight percent thought older homes had more character.

Interestingly, nearly a third of these buyers said older homes were less expensive. But this varies dramatically by region. Existing homes had a perceived price advantage in the Northeast and Midwest. New homes were thought to be less expensive in the South and West.

The same dynamic worked in reverse: The majority of new-home buyers looked at used homes before they bought new. That was true of 71 percent of first-time, new-home buyers and 58 percent of repeat new-home buyers. Further, 18 percent of repeat new-home buyers also consider remodeling their current home.

In general, when used homes and remodeling win, it's because of the neighborhood (48 percent of those surveyed who chose to remodel said it was because they liked their current neighborhood or community). That old adage "location, location, location" still has legs.

So if the sales associate asks shoppers if they are also looking at used homes, and the answer is, "Yes," as our survey indicates is likely, what should your sales associate's response be? Here is Joy's list of new-home advantages to sway shoppers towards new:

*Safe. New homes are safer. They are built to more stringent building code standards with up-to-date regulations covering smoke detectors and other safety features.

*Efficient. They are more efficient, especially heating and cooling equipment, refrigerators, dishwashers, and laundry equipment, and less expensive to operate than the used things in old houses. The elements of a new home are new and less likely to break down, and, if they do, they are still under warranty.

*Healthy. Not only are new heating and cooling systems more efficient and less expensive to operate, they have also been designed to help us live in cleaner, healthier environments.

*Current. They have up-to-date kitchens and bathrooms. If you buy used, these are the first rooms that will need to be modified or changed, and that adds a lot to a used home's real price.

*Responsive to lifestyle. New houses are designed for the way people really live. Life has changed and new-home design reflects these new lifestyles with high-tech wiring, computer niches, home theaters, hobby rooms, and informal spaces.

*Social. In established neighborhoods, the social circle has already formed, and it may be hard for a newcomer to enter. In new neighborhoods, everyone is new, and it is easier to form friendships.

*New things. It's all new--rugs, flooring, counters, cabinets, lights, colors--and you get to pick the things you like.

*Tech. New homes are or can be wired for technology; more than 40 percent of new homes come tech-wired as standard.

*Light. Fenestration is the word Joy used. New homes have more light, more and more energy-conscious windows and doors.

*Psychology. It's more fun to buy new. Who doesn't feel a burst of happiness when buying something new?

New or Used?
Piecing the equation: Why do people decide to buy new or used housing? People are drawn to new housing by the desire to avoid maintenance. When they choose used, it is often about location and the desire for a particular neighborhood.
Didn't want maintenance headaches
Less expensive
Designed to be exactly what you wanted
Didn't want a fixer upper
Quality of a new home is better
Wanted a particular neighborhood or location
Less expensive
Mature landscaping
More character
Quality of an older home is better
New home has many problems compared with an older home

Buyers cite avoiding maintenance (27 percent) as their main reason to choose new. Another 19 percent said they didn't want a fixer-upper. That means nearly half of new-home buyers were driven by a desire to avoid the toil and sometimes torture of maintenance and repair.

Joy says it is even more than that, partly as a result of Sept. 11. "Though we can't choose how we die," she says, "we can choose how we live." Since most people are busy, they are looking for convenience and low maintenance. "'Easy' has almost replaced the word 'free' as an attention getter, especially among women who don't have enough time," Joy says. Think of labels such as Easy Off (oven cleaner) and Nice 'n Easy (hair coloring), she adds.

Builders, surveyed separately, saw the issue much differently. Forty-nine percent of surveyed builders think buyers choose new primarily because those buyers think the quality of a new home is better, a concept only 12 percent of surveyed new-home buyers cite (see "New or Used?" chart, right).

What factors contribute to low maintenance? Well, one is new warranties for everything from dishwashers to warming drawers. Some roofing and siding materials require very little maintenance and come with 50-year warranties. Flooring materials, such as pre-finished wood and tile, also require little maintenance and have long warranties.

Some builders include exterior landscaping and maintenance in the dues paid for homeowner associations. This can be especially effective in the case of second-home communities and regions that receive a lot of snow. Don't keep low-maintenance a secret. Tout those warranties and easy-care features to buyers.

Space Play 3. People want as much space as they can possibly buy.

Space--more space--is the most frequent response among new-home buyers when asked how the new house they currently live in is different from their last house.

Twenty-two percent of those who purchased new homes and 15 percent of those who bought used houses bought more space. Only 6 percent of new-home buyers and barely 10 percent of those who bought used were downsizing.

Why They Buy*
Search for more: Design/layout figures prominently for both those who buy new and those who remodel. But guess what? Those remodeling consumers shopped new homes before deciding to renovate where they were; they are among the potential new-home customers that got away.
Closer to work

Closer to conveniences

Closer to schools

Larger lot

*exclusive of price, main reason for buying this home

Six percent of buyers bought new because they wanted larger yards. No other feature on our long list of feature changes from a previous residence garnered more than 5 percent-- different architectural style, better neighborhood, and location among them. This suggests several things. First, once people move into a neighborhood, they move thereafter within that neighborhood. And, a builder's best prospects may just be the neighbors.

However, when asked to choose from a long list, buyers' main reason (exclusive of price) for buying their current home, the picture changed slightly. New-home buyers cited design/layout, neighborhood, closer to work, conveniences, and schools, before bigger house and larger lot. So more space might not have been the main motivator but certainly became a consequence of moving that rose to the top of their "new home is different from their last home" list.

The issues that most builders focus on--providing the ultimate floor plan or a better-quality house--weren't quite as important, though they probably still figure into most decisions to buy new. Sixteen percent of recent new-home buyers said the design and layout had been the main reason to buy their new home exclusive of price. Joy points out that design and layout is another way of saying more space (which is what buyers said when asked what they had gotten in their new home). And sometimes it isn't just more space, she says, "it's space in the right places (see "Why They Buy" chart, right).

Space is a motivator, especially if the builder puts bigger spaces where the buyers want them. And this is where builders scored well in the survey. It seems everyone knows correctly that buyers want bigger kitchens, living and family rooms, and more bedrooms. Although when asked, 28 percent of new-home buying respondents listed "other" as their choice for space expansion. Other included hot tubs, game rooms, sun rooms, home offices, a real argument for building flexible plans with more space ready for whatever (see "Where the More Is" chart).

Time Off

Leisure pursuit: More than 40 percent of buyers have a hobby room and more than 25 percent have a craft area.

Note: Numbers do not add up to 100 percent because respondents were offered a list from which they could choose multiple answers. these were the most frequently selected answers from that list.













When asked what specialized space they had in their home, a surprising 42 percent said, "hobby room." If not a whole room, 26 percent said they had a craft area, and 16 percent had a sewing area. Just over one-fifth of buyers had a home theater (see "Time Off " chart, left).

Though 70.1 percent were not involved in their new home's design, one-third of buyers think every bedroom should have its own bathroom; 37 percent think the laundry should be near the kitchen.

Water Works

4. Kitchens and baths are the new home builder's ace in the hole.

What are the owners of existing homes least happy with? Their kitchens and baths.

Let's face it: Wherever your potential homeowners are currently living, the kitchens and baths are old, used. And even though, as Joy points out, families sit down for dinner together only two nights a month, they still want a lovely kitchen. The kitchen is a psychological center, the home's heart.

The new commercial for Boston Market carry-out really taps into today's busy society. The commercial begins with a shot of a gourmet range with nice pots and utensils on top. As the camera moves closer, "mom" comes home and plops a Boston Market bag on top of the stove and calls, "Dinner's ready." And that is the dichotomy of cooking. During the bustling week, homeowners bring in carry-out or heat pre-prepared foods. However on the weekends, or for special occasions, they want to imitate the things they see on television.

So include or offer as options the microwave oven with oscillating base that holds the large servings of casseroles or other main dishes. Offer two microwaves. Include places to hide the stuff that no one has time to pay attention to. And make sure there is a space for a television with a VCR or DVD player, so the household chef can watch TV or play a cooking show to prepare real gourmet fare when there is time.

Do make sure the bathroom is special, Joy says, "You start and end each day there." In some households, it is the only place of assured privacy, for peace and quiet, and to be alone. But it's not all about big. "Bathrooms maxed out a while back," Joy says. "And maybe you'll offer a whirlpool bathtub, but only 4 percent of people like those long soaks." What they are really after is splendid showers and luxurious features such as a heated towel rack.

Model Mania

5. When it comes to sales tools, nothing beats the real thing.

We also asked buyers to rate the sales tools that builders commonly employ--brochures, model homes, and the web, to name three. We asked builders the same question, and found a disconnect between what builders and their customers think is most important.

Product Shopping
SHOP EARLY, SHOP OFTEN: New-home buyers look a lot and at multiple sources when choosing products and materials for their new homes.


WEB 19%

For one thing, new-home shoppers prize model homes above all else. Sixty-five percent of new-home shoppers tour models, indicating the demise of the model home may be greatly exaggerated. More than half check out samples and displays (only 12 percent of builders thought buyers checked displays).

There are also six times as many buyers cruising the Web as builders think. Nineteen percent of buyers use the Web rather than the 3 percent builders expected, suggesting it is time for builders to make sure their Web sites are all they ought to be.

What might all this mean? Show buyers everything, using product displays, Web sites, and models, says Joy. "Imagination does not work the way it used to," she says, blaming this phenomenon on television (see "Product Shopping" chart, right).

New-home models need to stimulate what little imagination the buyer has left. But they don't have to be huge. Slightly less than 60 percent of buyers confessed they had "a minimum acceptable house size" that they wanted. Of those, 40 percent would buy a house smaller than 2,000 square feet, slightly fewer sought 2,000 to 2,800 square feet, and only 20 percent required houses between 2,800 and 3,500 square feet.

Once they've made a choice, are the surveyed buyers sorry they moved? No way. A resounding 97 percent said "NO!" when asked, "In retrospect, do you wish you had remodeled your previous home instead of moving to this home?" Gathering the Data

Hanley-Wood, LLC, publisher of BUILDER and REMODELING magazines, and the Joint Center for Housing Studies at Harvard University produced the Housing Continuum Research project. Media, Pa.-based International Communications Research (ICR) surveyed, via telephone, 1,509 U.S. consumers during the spring of 2002. Within the past two years, 507 had purchased a newly built home, 502 had purchased an existing home, and the remaining 500 had spent $5,000 or more on a remodeling project done with remodeling contractors. ICR also surveyed, via the Internet, 459 contractors: 324 home builders and 135 home-improvement contractors. The Joint Center assisted with the project's research design and did data analysis. Whirlpool Corp. and the National Association of the Remodeling Industry sponsored the survey.

Where the More Is

Living room: When asked where their new homes need more space, new-home buyers choose kitchen and family room. However, the largest percent answer was "other" which argues for the idea that homes be designed with flexible "whatever" space.
*includes hot tub, yard, game room, sunroom, office, etc