Credit: Anje Jager/agencyrush.com
The Great Recession was devastating to new-home buying. Annual sales dropped to 50-year lows and many builders didn’t build a single home for years. The tide is turning as the economy recovers, as pent-up demand is released and as individual housing markets stabilize. As builders and buyers return, the next question becomes what should be built? The NAHB has conducted extensive surveys of what potential home buyers want and the most recent edition has just been published. Copies are available from the NAHB bookstore but some highlights demonstrate what has changed and what remains most desirable.
The single-family detached (SFD) home remains the solid favorite to seven in 10 prospective new-home buyers. But preferences and changes in preferences do vary across demographic classes. For instance, younger Generation X and Y buyers have a stronger preference for single-family homes but are less likely to live in a SFD now. At the other end of the age spectrum, baby boomers and older buyers have a lower preference for a new SFD but are more likely to live in one now. Race and ethnic origin do not affect the dominate preference for a SFD home.
As prices for existing homes fell, it is not a surprise that the choice between a new or existing home changed. In 2004, 29 percent of those surveyed preferred an existing home, but that share rose to 45 percent in 2012. Over the same period, the exchange was a reduction in the desire for a custom home built on the owner’s lot.
Prospective new-home buyers expect to pay about $204,000—down significantly from $231,000 in 2007—as buyers set more realistic goals. For that price, they want a 2,226-square-foot home, which implies a $92 per square foot price. Buyers do want their next home to be 17 percent larger than their current home and that size matches homes built in 2011. The desired size does fall as buyers’ age increases.
In a similar contradiction to some popular notions, prospective buyers do not want increased density or to move into central cities. They do want walking trails, parks, and a community pool.
The most popular interior arrangements have not changed significantly, although a few features are trending upward. Four-in-five buyers want three or four bedrooms, and two-thirds want two or two and a half baths. A completely open kitchen and family room design has gained preference since the mid-decade boom and is now tied with visually open with a half wall at 37 percent each. The preference for open design increases as the number of previously owned homes increases. Two-thirds of the potential home buyers want 9 foot ceilings on the first floor.
More than half want a two-car garage, up slightly from boom years. For households willing to pay more than $500,000, the desire for a three-car garage or larger rises substantially. And it seems no one wants to settle for uncovered parking. Brick and vinyl facade preferences vary according to the region: Brick is the dominate preference in the South while vinyl carries the day in New England and parts of the Midwest.
As might be expected, relative preferences vary by the price the buyer is willing to pay. Technology preferences and distinctive design preferences rise with price but ease of maintenance and energy efficiency predilections fall with price. Interior living space is twice as popular as proximity to frequent destinations in the influences for a home purchase. Likewise, quality and appearance rank well above features, warranty, upgrade price, and brand name as focal points when choosing a new home.
The study contains more rankings on choices and preferences as well as highlighting when they vary significantly across the nine Census regions, buyer age, price, and racial and ethnic subgroups. Some rankings and differences are intuitive and some have less obvious results. No two consumers are exactly alike so the results can be a starting point for what the new housing demand looks like.