Changing home buying patterns

“Change your thoughts, and you change your world.” (Norman Vincent Peale), from the Jack’s Winning Words blog. Peale was talking about changing from pessimism to optimism as a way to change your life. From a recent news feed about the results of a poll by Harris, it would appear that home buyers are changing their thoughts about what they want in a new home and when they can afford to buy it.

The Harris interactive poll commissioned by Move.com reveals that potential home buyers value "green" building features more than luxury amenities. When given the choice of features like solar energy panels or energy-saving appliances, a whopping 49 percent considered them important, while only 31 percent rated luxury amenities as important. This could be the result of the weight of the Gen-X and Gen-Yers kicking in to overcome the “me first” attitudes of the Baby Boomer generation.

The survey also revealed that rating the neighborhood they might choose would depend largely on two major factors: crime rates and proximity to work. Somewhat flip-flopping the mindset of home buyers even just a few years ago, more respondents in the survey admitted that they were willing cut personal spending and sacrifice some comfort to be able to afford a home. As few as 6 percent would, however, be willing to give up their proximity to shopping and a meager 3 percent would give up their proximity to public transportation.

Even though these statistics are telling, the survey also found that a large majority of potential home buyers -- 81 percent -- say they are facing considerable financial obstacles in purchasing a home, including high prices, a marked uneasiness with the economy, and income concerns as well. That is reflected in the almost total stoppage of the “move-up” market locally, where the homes in the above $300,000 range are languishing. Those homes have in the past been purchased by workers who were getting promotions and moving up in life. These days just staying afloat is the goal of most. Don’t even mention moving up.

The underlying current from the survey, however, is strong in the long run, with almost half of the respondents expecting conditions for buying a home to improve after the election, 44 percent admitting they would like to purchase a different house and 47 percent wishing to do so within the next five years. I for one wish that they would do something, too.

What buyers want...

I was reading one of the real estate trade publications that I get yesterday and there was an article about the 2007 National Association of Realtors (NAR) survey of buyers. Every year the NAR goes out and interviews hundreds of buyers to find out what they are thinking, what things they want in a home and how they feel about things like the real estate process and the agents that they encounter. This article focused upon what the buyers say they are looking for in a home.

It’s always an interesting chicken or egg conundrum trying to figure out whether the builders are putting stuff in because people asked for it or whether some builders are actually setting the trends by building stuff in that people end up liking. It’s likely a bit of both, especially in the Midwest, which is not exactly known for being cutting-edge with anything new in fashion or home features or anything else.

Anyway, most of the “Most Desired Home Features” in this article weren’t exactly earth shaking new things. The most desired features that respondents to the 2007 NAR survey listed were:

Feature -
Central air conditioning - 1 (Apparently being cool in the summer is an enduring requirement, since this feature was also number 1 in the 2004 survey)
Oversize garage - 2 (This has got to be a "guy thing.")
Walk-in closet in master bedroom - 3
Backyard/play area - 4
Cable/satellite TV-ready - 5
High-speed Internet access - 6 (Well, of course. One couldn't live without this feature.)
Separate shower in master bath - 7
Patio - 8
Fencing (fenced back yard) - 9 (For both pets and kids, I suspect)

I find the choices on this list fascinating, since I’m not yet seeing the demand for some of these things. I’m still seeing demand for large, gourmet kitchens and large master bedrooms with baths that have separate showers and tubs and walk-in closets. I guess I can also agree that the Cable TV and Internet access are big requirements locally. The backyard/play area/fenced yard things kind of go together and I do see some demand for that, but it likely wouldn’t make the top of the list for the buyers with whom I’ve been working lately.

There were other categories explored in the article that covered things like “Very Important Home Features” and I can tell you that there were no surprises on that list and all are in demand locally, from walk-in closets and jetted tubs to granite top and hardwood floors.

In the category of neighborhood features, I was a bit surprised to see that sidewalks as a desired feature of the neighborhood had slipped a bit from being demanded by 27% of the 2004 respondents to only 25% now; while being near shopping went up from 22% in 2004 to 25% now. I guess people want to shop more, but don’t necessarily want to be able to walk to the shopping areas. People were also less concerned about being close to parks and schools, but having public transportation increased in demand.

The current “green” movement also is having an impact on buyers with 94% of older buyers being concerned about energy efficiency and 80% 0f younger buyers also expressing a preference for energy efficient homes. This is offset somewhat by the continuing trend to bigger is better in homes, which still leads to total energy consumption going up.

Even with all of this data, I think the real number one feature that most of the buyers that I’m working with today is affordability. People would live to get all of this stuff and get it cheaper. That’s the dilemma facing builders right now. They started putting all of this stuff in bigger and bigger houses and ended up with home that most people couldn’t afford. The builder who figures out how to put all this into a little bit smaller home for a lot less money will be sitting on a gold mine.