NAHB Economist Carmel Ford shares her insight into consumer preferences based on NAHB surveys and analysis
Builder and Developer: What trends are you seeing right now in consumer preferences?
Carmel Ford: We did a study in 2018 titled “Consumer Preferences Survey.” So that just looks at the features consumers want in a home and in a community. One of the findings was that 69 percent of consumers want to buy a home in the next three years, indicating that demand is strong for owner-occupied housing. People definitely want to be homeowners, and particularly in the near future.
In terms of consumer preferences, in the 2018 survey we found that people are living in smaller homes. And this is also seen in the census’s survey of construction. In that survey, in 2018, the average square footage of a home was about 2,500 compared to about 2,700 in 2015. So, people are living in smaller homes. Of course, there’s the demand for that, but also, that can be explained by the supply constraints, in terms of builders facing restrictive zoning laws, and higher lot prices.
Also, in the 2018 consumer preference survey, they found that 77 percent want to be in single-family detached homes. A minority of consumers want to live in multifamily housing or some other type of housing. We also find that the majority of consumers want a new home, 31 built by a builder, and 23 percent want a custom home built on a lot that they own. And that’s in comparison to existing homes.
We also found that a majority want to live in the suburbs. 64 percent expressed a preference for living in the suburbs compared to 24 percent in rural areas and 11 percent in central cities. Most consumers want three bedrooms, 49 percent, and 25 percent want four bedrooms. But, along with that other fact, that consumers are living in smaller homes, the trend for fourbedroom homes has been going down a lot lately.
B&D: Do you find homebuyer preferences vary greatly by market/region?what is NAHB doing to combat it?
CF: The trend is pretty consistent across geographic areas. The highest share who want to live in the suburbs are in the mountain region. These are census divisions. So that’s like Colorado, Nevada, Utah, Arizona, New Mexico, Idaho, Montana, Wyoming. And the region with the lowest share who say they want to live in the suburbs is the east south central region with 52 percent, so it’s still over 50 percent who said that. And that’s Mississippi, Alabama, Tennessee, and Kentucky.
B&D: How do the wants of younger generations compare to those of older generations?
CF: We actually have this blog called Eye on Housing, and I did a series of posts on what millennials prefer, compared to Gen-Xers, Boomers, and seniors. There are a lot of differences in terms of features that millennials want compared to older generations.
We did find that millennials do want larger homes compared to Boomers and seniors. For example, in the 2018 survey, the average square foot home that millennials want is approximately 2,400 square feet, compared to approximately 1,900 among Boomers and 1,869 square feet among seniors. And I’m sure that’s related to the fact that they’re at a different point in their life, where perhaps they’ll want to expand their family.
We also looked at a bunch of features that all generations of consumers might want in their homes, and survey takers were asked to rate them on a four-tier scale. So the scale is “Essential/Must Have,” “Desirable,” “Indifferent,” and “Do Not Want.” So, as part of that, they were asked to rank specialty rooms. We found that millennials, compared to older generations, have an interest in exercise rooms, media rooms, game rooms, and two-story foyers. But I want to caution that when we did this ranking system, it didn’t account for cost, so this is based purely on what people want, but if you incorporate cost, I’m sure the outcomes are different.
In terms of community features, we found that millennials prefer to live near parks, playgrounds, daycare centers, and baseball and soccer fields. Older generations don’t see that as essential compared to the millennial generation.
We also looked at kitchen features and colors that people want in their homes. That’s pretty consistent across the generations. The polarity want white counters and cabinets, with 31 percent of millennials, 34 percent of Boomers, and 38 percent of seniors. So it’s slightly more, but pretty similar.So in terms of kitchen features and colors, there are a lot of consistencies across generations.
B&D: Do you have any advice for builders in meeting homebuyer wants and needs?
CF: Like I said before, we put together a ranking system to determine the features that consumers want in their homes. We found that a relatively small share of buyers, across all the features, say particular items are essential, but a lot say that these features are desirable. So, with that considered, we think that builders should consider making a lot of features optional to attract buyers.