In real estate, it’s the eternal question: What do "they" want?
"They" are the buyers who tromp through home after home, usually leaving little in the way of concrete feedback about what kinds of features and characteristics they’re looking for and how much they’ll pay to get them.
Well, here may be a few clues, via a recent study by American Lives, a consumer-research firm in Carmel Valley, Calif., that was conducted in collaboration with Builder magazine, a trade journal.
In May, American Lives polled 650 people who were touring builders’ model homes or who had recently purchased homes in nine markets: California; Nevada; Arizona; Texas; Florida; North Carolina; Virginia-Washington, D.C.; Michigan; and Indiana.
Although company president Brooke Warrick said the study obviously focused on the attitudes of those who were shopping for new-construction homes, their survey responses are indicative of the broader market, as 60 percent of them said they had also looked at resale homes, foreclosures and/or short sales.
Five things to know about today’s would-be homebuyers:
1. They’re on the younger side (65 percent are under 45, with most of those in their 30s), and don’t have big budgets because they don’t have big paychecks (fewer than 20 percent had annual household incomes of more than $100,000, and more than half said their households earned $75,000 or less).
Most of them were married, though one-third were either single or in unmarried "partner" relationships.
2. Their interest in living a more frugal existence, as heralded by countless media reports, seemed genuine, according to Warrick, who explained that the home shoppers consistently indicated they were seeking a "simpler" lifestyle and staying closer to hearth and home.
Their new values lean on spending time at home with family and spending less money, he said.
" ‘Simplicity’ might be a better term (than frugality)," Warrick said. "Earlier this year, in another survey, we found that even when people didn’t seem to need to restrict their purchasing power, there was a level of frugality present."
And he doesn’t regard this mindset as a fad. "It’s a fundamental attitude change among a portion of the population," said Warrick, who added that his company had done "thousands" of consumer surveys over the years.
"Among another portion of the population, it’s just a fleeting value. But we’re seeing people who are adopting that attitude now in larger numbers than we’ve seen in a very long time."
3. Their attitudes exhibit a mix of worry and, at the same time, confidence about the economy.
On one hand, they voice serious concerns, with 70 percent saying current economic conditions are "not so good." About 27 percent said the economy is getting worse — but an identical number said things were improving.
And on the job front, 55 percent said they were somewhat or very worried about losing their jobs.
Still, 50 percent of the homebuyers described their home searches as either somewhat serious or very serious, and 20 percent recently had bought homes. Despite their worries, two-thirds of the sample said they expected the economy to be improved in a year.
4. There’s energy-efficient, and then there’s "green," and Warrick’s survey concluded today’s buyers are willing to pay extra for energy efficiency, but not for green.
"If you break up the world that wants sustainability into two parts, one wants energy efficiency and the other part is the tree-hugger world, who want green materials and no waste," he said.
"Clearly there are more energy-efficiency people who are willing to spend money than the people who want green products and will pay extra for them."
About 32 percent said they’d pay an extra $5,000 for energy-efficient features such as extra insulation, high-performance windows, efficient heating, cooling, lighting, appliances, etc., with the presumption that the homeowner would recoup the cost of those items over time. About 14 percent said they wouldn’t pay anything extra for such features.
Green features were defined in the study as items that promote recycled materials, resource efficiency or indoor-air quality.
In the survey, only 16 percent said they’d pay as much as $5,000 for those features; 36 percent said they wouldn’t pay anything extra.
5. Given the choice of buying an older home in their preferred neighborhood versus a newly constructed home in a nearby but less-preferred neighborhood, the home shoppers were almost evenly divided, with a slight edge given to the new construction.
In a related series of questions:
- 95 percent said they thought the community is just as important as the home itself;
- 79 percent said the most important thing is to get the most square footage at the lowest price;
- 69 percent said they’d consider a smaller home in order to be in the neighborhood they want.