New Homes For Who?
The National Association of Home Builders’ annual survey of new home prospective purchasers is based on the opinions of 3,682 prospective homeowners in the summer of 2012. It is presented as a reputable sample of potential American homebuyers. But is it?
The NAHB survey reports that new home consumers are requesting larger homes with four or more bedrooms and builders across the nation appear to be responding with their latest versions of family homes. A two-story dwelling with functional open space planning on the ground floor, and served by energy conservation features are preferences that rank ahead of neighborhood location in this survey (the historic key criterion for all real estate). But, the survey sample appears to be dominated by move-up family buyers—a shrinking proportion of nationwide households. Builders accepting the consumer preferences from this survey may be missing the preferences of empty nesters and newly-formed young households, both of which constitute far larger target consumer target groups than move-up households.
According to the U.S. Census Bureau, the 2012 rate of home ownership is down to 65.4 percent of U.S. households, the lowest rate since 1996. In fact, there has been a steady decline in homeownership over the past eight years since the all-time peak of 69.0 percent in 2004. Of even greater importance for residential developers and builders is homeownership by age, with the biggest decline occurring in the 30-to-39 age group (over a 9 percent decline since 2004), a major age group targeted in the NAHB survey. Consumers over age 45 exhibit more than 70 percent homeownership, continuing up to over 80 percent for those over age 65. But the preferences of these smaller households do not appear to be represented in the NAHB Buyer Preference Survey.
The biggest consumer groups in this country by age are the 25 percent of households labeled “Baby Boomers” age 46-64 and the even larger “Generation Y” consumers age 15-32—together representing over 62 percent of all Americans over age 15. New home preferences for each of these target consumer groups should be of greater interest to developers and builders than the declining family move-up market.
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