State of the Housing Market

Parker-Associates-Real-Estate-Marketing-Consultants-State of the Housing Market

A featured speaker at the 2017 NAHB International Business Show was Rose Quint, with a graphic presentation of a November survey of new home consumers likely to buy within three years and a builder survey of 2017 expectations. Consumers’ biggest obstacle to purchasing a new home is finding a suitable dwelling at an affordable price and sufficient savings for the down payment. Indeed, new home prices have escalated across the country, with builders tending toward larger homes for older more affluent consumers due to the lower demand by Millennials with college debt and others unable to find suitable employment. Higher employment rates in 2016 tended to increase offerings of smaller new homes, but the overall market continues to reveal limited offerings.

The NAHB consumer survey segregated its respondents into four income groups. Those with $150,000+ annual income expressed greatest desire for a laundry room and “Energy Star” appliances, windows, etc. throughout the whole home as well as above-code insulation. Their interest in safety (or fear) was expressed by their desire for exterior lighting. Interestingly enough, despite their desire for energy features, they did not mention solar installations — a reaction to higher initial cost or lack of salesmanship by builders?

The next income group, $100 to 149,000 annual incomes, also listed Laundry Room as their number one desire followed by Exterior Lighting and the same energy features with above code insulation as the more affluent group. Once again, no mention of solar features, although they did mention wider hallways and doorways.

The $75-99,000 annual income group also expressed their strongest desire for a Laundry Room followed by Exterior Lighting and Energy Star features.

The desire for a Full Laundry room became unanimous with the same preference from the Less Than $75,000 income group. They too listed desire for the Energy Star features. The similar preferences by all four income groups could be directly tied to successful advertising of these features, but inadequate advertising by the higher price (but later dividend) of investing in solar energy. We have experience with a small local builder who has promoted the complete energy packager very successfully, an example of efficiency-minded buyers at all price ranges. This conclusion ties in with the next survey question indicating over two-thirds of respondents would prefer a smaller house with high quality products and amenities rather than a bigger house with fewer amenities.

The fear issue promoted so successfully by our new president shows up clearly in the survey with safety technologies preferred by a majority of respondents. Despite strong publicity on the advantages of inner-city living, these respondents overwhelmingly prefer suburbs, and most prefer a new home over an existing home.

Looking ahead in 2017, survey respondents expect new homes are most likely to include a master bedroom walk-in closet, laundry room, low energy windows, great room, high ceilings (9’plus), programmable thermostat, granite countertops and central island in the kitchen, Energy Star rated appliances, and two-car garages.

A November survey of builders for 2017 reveals a declining number of 3-car garages, three full bathrooms, four bedrooms, and air-conditioned house area. It seems that builders may be cutting back on these items to keep prices attractive, or did they assume that adding increasing cost items did not benefit them in 2016? Whatever the reason, these two surveys do not indicate any startling innovations due in 2017 new home offerings. Maybe next year?

February, 2017
Dr. David F. Parker
President
Parker Associates
david@parkerassociates.com

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