Changing Demands in Home Ownership
by Elisa Meyer on 2017-01-12 4:00pm
As we enter 2017, a lot of uncertainty surrounds the economy, and that includes the construction industry. For many builders and developers, financing is difficult to obtain, so every project must count.The large-scale retirement of baby boomers, long speculated on, is also upon us. With that, come changes in the market and consumer desires. As the baby boomers exit the job market they make way for a new crowd, the generation born between 1982 and 2004: millenials.
PricewaterhouseCoopers’ and the Urban Land Institute's Emerging Trends in Real Estate annual report for 2017 examines the current state of real estate investment, and the direction it’s heading. With the housing bubble and subsequent recession fresh in mind, investors and financing institutions are behaving conservatively.
As the cost of real estate and housing continue to rise, the group left in the cold isn’t necessarily the low income earners, who qualify for government programs and assistance. It’s the middle class, who may want to buy homes, but can’t afford them, and don’t qualify for any breaks. It’s these consumers who may present an opportunity for construction.
As one longtime CEO of a publicly traded company said, “We’re not paying enough attention to affordable housing, and I don’t mean low-income or government-subsidized. Just regular rents. No new buildings are providing that kind of product. Time will tell if that’s going to come back to haunt us. Not everybody makes $75,000 to $100,000 a year.”
- PwC 2017 Report
What do these consumers want? It may be a surprise. Although millennials are waiting longer to buy homes than the previous generations, it’s not because they don’t want to, although the generation who watched their parents and grandparents suffer the housing crash are understandably cautious. The burden of student loan debt, coupled with tighter requirements for homebuying, create concerns over downpayments and affordability. A desire to maintain mobility has also extended their time in the rental market.
But according to Realtor.com, the age group doesn’t make a lot of difference in what consumers want in a home. Solidly half of of homebuyers, both baby boomers as well as millennials, desire a place in or near the suburbs.
While the importance of an ideal location isn’t news to anyone, but the definition of it may be. High gas prices and eco-consciousness mean buyers want proximity to public transport. The ideal mix presents the community feeling, space, and value of the suburbs, but with the proximity to transportation and other amenities of the city.
But young homebuyers also desire a different type of home than their parents did, with different amenities. Here are the top qualities that they are looking for in their homes:
Technology: The generation who grew up with smartphones doesn’t want or need a landline. Climate control and surveillance systems that can be operated remotely are more appropriate. On this note, be sure that this technological preference is facilitated during the buying process. Online photos and virtual tours will attract the generation who begins home shopping online long before they hit an open house.
Energy Efficiency: More eco-conscious than previous generations, young homebuyers also see the rising cost of utilities. As a result, features like extra insulation, ceiling fans, high-quality windows, and solar panels are becoming more common and desired.
Multi-Use Spaces: The formal dining room is fast becoming a thing of the past. Young families would rather have open, versatile spaces for a lifetime of activities. Lots of time spent in the kitchen and common areas means bar counters, lofts, and nooks are the new home hangouts.
Indoor/Outdoor Spaces: Cozy patios are highly desired, adding to the usable space of a home without officially adding square footage. Sliding or french doors that blend these spaces create an open, versatile area. Exterior lighting of these areas extends their usability as well.
Home Offices: Nearly a quarter of employed Americans work from home, and that number is growing. An ideal workspace or home office may be a strong selling point, especially if the space is designed to be multi-use.
Laundry Room: Across the board, the one speciality room that home buyers of all ages really want is a laundry room. In fact, 92% of respondents to the National Home Builder’s Association survey desired one, with 50% rating this as “essential”.
Low Maintenance: Young homebuyers are used to efficiency, and spending all weekend keeping the house up just isn’t. Features such as a whole-house vacuum and hardwood floors that save homebuyers time on chores will go a long way.
Affordability: In addition to gearing housing towards the middle class, keep in mind that this generation is savvy to the extra costs of HOAs, Mello-Roos, and special assessments. With the burden of student loans and rising cost of living, for many these costs cut into their housing budget to an unacceptable degree, and will be avoided.
Real estate projections for 2017 are strong. Many millennials will be ready and able to purchase their first homes as interest rates remain low and housing prices stable. Will they be able to find the homes they want? In order for them to get the houses they need we need contractors willing to take on the job of building these homes. If you feel ready to take on this responsibility, and reap the rewards, then get yourself licensed as a residential contractor. Take AYPO's Michigan Residential Builder Pre-license Course and get started today.