This is excerpted from a special report published in the July 2009 edition of July 2009 edition of Builder, a sister publication to ProSales. It was written for Builder by John Caulfield, Jenny Sullivan and Nigel Maynard.
The homes that sold like gangbusters during the good times are not what tomorrow's buyers want.
That is the unsettling conclusion from the recent "Builder/American Lives New-Home Shopper Survey" as well as interviews with buyers in the three groups–immigrants, Baby Boomers, and Millennials–likely to drive demand within the housing industry for the foreseeable future.
These buyer segments are expected to present builders with sometimes conflicting preferences. In the past, builders might have deemed those requests incompatible with their business models. In the future, they might not have such an option. For the sake of their business' survival, they will need to pay attention to these shifts–as will the dealers who supply products to those builders.
Among the findings:
- Immigrants, 40 million strong and counting, still see their American Dream in a big house with enough space for their extended and visiting families.
- Boomers nearing retirement still want to downsize, but without sacrificing quality or comfort. Their buying decisions now often reflect serious concessions to financial and health events many hadn't anticipated or chose not to think about.
- Millennials–those born between the late 1970s and early 1990s–want urban (or at least higher-density), affordable, well-designed, uncluttered dwellings that complement their lifestyles.
- Buying the biggest, flashiest house is less of a priority for new shoppers. While the recession presents customers with opportunities to get more house for their money, fewer are willing to spend beyond their means.
- 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.
Saving the Earth–and Money.
If the survey did anything, it showed how the relationship between environmental protection and the costs of running a house is emerging as a seminal factor when shoppers select one house over another. Anywhere from 80% to 95% of respondents now see energy-saving HVAC systems, windows, lighting, and water fixtures as "very important" or "essential" to their homes.
More than half of those polled said they'd be willing to pay between $2,000 and $5,000 more to include an energy-saving feature in their new home, as long as they could recoup the cost over time, preferably within two years. (Just under 20% said they'd shell out up to $10,000 per feature.) But if the returns aren't there, shoppers become decidedly less eco-friendly: Nearly one-quarter said they wouldn't pay extra if they couldn't recoup the cost, and about the same percentage said they'd only spend up to $1,000 or $2,000.