Wednesday, October 5, 2016

The Anatomy of Today’s Homebuyer

The real estate market is somewhat of an enigma these days, with some metro markets booming while others are showing signs of slowing. But no matter whether we examine supply shortages or interest rates, rising rental costs or increasing urbanization, there is one thing that matters most: home buyers.  In fact, homebuyers are so important to the housing market they’re like the engine, the fuel and the steering wheel of the car!

For sellers looking to gain a competitive advantage and net top dollar, understanding homebuyers is more critical than ever. By looking at who they are, what they value, and how they operate we can really market your home sale with maximum efficiency.

So what do today’s homebuyers really want?

Modest floor plans
Surveys show that American homebuyers are starting to walk away from the cavernously large McMansions, and want slightly smaller floor plans with more warmth and style instead.

The ideal home size in 2000:
9%   800-1,400 sq ft
28% 1,401-2,000 sq ft
27% 2,001-2,600 sq ft
13% 2,601-3,200 sq ft
9%   More than 3,200 sq ft

The ideal home size in 2015:
9%   800-1,400 sq ft
32% 1,401-2,000 sq ft
27% 2,001-2,600 sq ft
12% 2,601-3,200 sq ft
6%   More than 3,200 sq ft

We can also look at new home construction for clues as to what the home buying public wants. In fact, the estimated average size of new homes has declined as such:

2008 2,520 sq ft
2009 2,480 sq ft
2010 2,377 sq ft
2015 2,152 sq ft

Interesting real estate fact:
Just how much has our preference for bigger homes grown over the generations?
In 1950 there was an average of 290 sq ft per person in the American household.
These days each person has about 924 sq ft in an American household!

It’s not just married couples buying homes!
9% of all single males buy a home, while an impressive 16% of single females buy a home!

These days, 13% of homes are purchased by multigenerational households.

Why are multiple generations in the same family buying a home together? Here are the top reported reasons:

24% Cost savings
23% Adult children moving back in
18% Caretaking for aging parents
10% Spending more time with aging parents

Where are home buyers searching for homes?
The top six sources for home searches are now:

1.     Online websites
2.     Real estate agent
3.     Mobile website or app
4.     Mobile search engine
5.     Yard sign
6.     Open house

By the way, the typical home search takes 10 weeks!

Tech is playing a more important role than ever
76% of buyers visit a home after first finding it through an internet search!

43% of buyers looked for properties online as the first step in the process.

89% used the internet throughout their home search.

78% visited more than 3 sites prior to taking action on a real estate site.

Where are buyers looking to live?
50% Suburbs or subdivisions
16% City centers or urban areas
11% Rural areas
3% Resorts/recreation areas

First-time homebuyers are trending a little older.
Age of first time homebuyers:
68% 34 and younger
29% 35-49
14% 50-59
7% 60-68
3% 69-89

Millenials are holding off on buying far more than their cohorts in previous generations.

Reportedly, saving a down payment is the biggest obstacle to buying for most people. It seems like high debt load is the main reason people can’t save the money to buy a home, including:

50% Too much credit card debt
46% Too much student loan debt
38% High car loans

When they do buy, the 5 most important factors that influence their buying decisions include:
1.     Quality of neighborhood
2.     Easy commute to their job
3.     Overall affordability
4.     Close to family and friends
5.     Quality of school system

How do home buyers differ by generation?

Gen Y
32% of all buyers
Average Age: 29
Household Income: $76,900
Size of Home: 1,720 sq ft
Median Price: $189,000

Gen X
27% of all buyers
Average Age: 41
Household Income: $104,600
Size of Home: 2,100 sq ft
Median Price: $250,000

Younger Boomers
16% of all buyers
Average Age: 54
Household Income: $96,900
Size of Home: 1,890 sq ft
Median Price: $216,000

Older Boomers
15% of all buyers
Average Age: 64
Household Income: $76,400
Size of Home: 1,800 sq ft
Median Price: $215,000


Silent Generation
10% of all buyers
Average Age: 73
Household Income: $63,600
Size of Home: 1,800 sq ft
Median Price: $190,100

What are they buying homes for?

60% of home sales are for the buyer’s primary residence
21% of home sales are for vacation or second homes
19% of home sales are for investment or rental properties

It’s all about the amenities
According to surveys, the top 10 amenities homebuyers are looking for include (in no particular order):

1. Walk-in close in the master bedroom
2. Low-E windows
3.  Linen closet
4. Separate shower and tub in master bathroom
5. Programmable thermostat
6. Great room
7. Energy-efficient appliances and lighting
8. 9-foot plus ceilings on the first floor
9. Separate laundry room
10. Insulated front door

Other polls of single buyers report that important amenities differ by sex:

Single female buyers prefer:
New kitchen appliances
En-suite master bath
Single level home

Single male buyers prefer:
Stainless steel and granite
Cathedral ceilings
New homes
Walk-in closets

Energy efficiency and working towards Green Homes is key
 These environmentally friendly features are critical to home buyers:

Heating and cooling costs
35% very important, 49% somewhat important

Energy efficient appliances
22% very important, 45% somewhat important

Energy efficient lighting
22% very important, 45% somewhat important

Landscaping for energy conservation
10% very important, 37% somewhat important

Environmentally friendly community features
10% very important, 34% somewhat important

Solar panels installed on homes
2% very important, 9% somewhat important

Green homes made up 17% of overall residential construction in 2011, but 38% of all new homes in 2016!

***

Look for part 2 of this blog where we reveal far more interesting statistics, trends and facts about today’s homebuyer!

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