Realty Views By Terry Ross
October 25 – Building new homes and selling them successfully in today’s trying real estate market has to be one of the more challenging accomplishments in the housing industry, especially in an economy where uncertainty seems to be the order of the day and the competition is largely from deeply-discounted foreclosure and short sale properties.
Careful decisions when it comes to product design are now necessary for builders to create an edge for themselves in competing against re-sale homes, according to a new survey by John Burns Real Estate Consulting of Irvine. Somewhat surprisingly given the state of our economy, home design has taken a leading position among the top home buying decisions – even ahead of price.
According to the Burns survey, location is still the top consideration for 30 percent of homebuyers, but home style and design is second at 21 percent and price is third at 17 percent. Location is almost always the first priority for real estate purchases, since most people purchase for job, family and/or lifestyle reasons which are usually related to the location. Once settled on location, design elements and features become the top consideration – and can even outweigh pricing concerns.
“While architecture varies by region, location and demographic profile, our survey findings showed that consumer preferences were not significantly different throughout the country,” noted Mollie Carmichael, a principal in the Burns practice. “The biggest differences were dictated by household size and family status, coupled with the financial realities in each market. For example, the Texas buyer can afford a lot more home than the Washington, D.C., buyer. We are seeing all sorts of creative design in the market, with many of the best-designed homes outselling the competition by 300 percent.”
Research into what buyers want most is key to successful design in today’s market, added Carmichael, including knowing what motivates buyers and understanding their lifestyles, finding the products and features most important to the buying audience and understanding the options that are being made available by the competition. Finally, keeping pace with the market dynamics and new trends that will help sell a buyer on a new home, versus purchasing a more dated home through the foreclosure process, are practices that the most successful builders are following.
In their poll of 10,000 prospective homebuyers, Carmichael said, “…good design and the right price is the recipe for success today. Our survey shows a significant preference for ‘casual and comfortable’ styles, versus more ‘formal styles’ in home designs. Consider the clever Apple advertisement that compared the ‘old IBM Guy’ in a suit to the ‘younger Apple Guy’ in a t-shirt: casual has become the new ‘smart’ today in many forms – including interior living.
“This trend toward casual living is further underscored by the high preference for great rooms throughout the country. According to our survey, all regions prefer great room living, with the highest percentage in the Northwest region. Casual living extends to the outdoors as well. The relationship between indoor and outdoor living is growing in popularity in many new home designs throughout the country. From the Northeast to the Southwest, consumers want the great outdoors to meet their needs and desires to connect aesthetically to natural outdoor spaces. In addition, these are spaces that provide an extension to their home for entertainment and connectivity with their friends and family.
“The best home designs revolve around great entertainment spaces where meals, an afternoon barbecue, holiday or a simple Sunday night dinner takes place. The most common spaces we think of for entertainment include the kitchen and family room. It is no surprise that kitchen and family room ranked among the most important rooms when looking for or buying a home. However, the design of private outdoor spaces and the home’s orientation to these spaces are often overlooked. Outdoor living rooms are now showing up in townhome living as well as luxury homes.”
Armed with this information, builders will have to be more creative than ever in their home designs to not only give consumers something they can’t get in a used house, but one that offers great value in today’s marketplace.
None of this has helped free up financing due to the dysfunction that has enveloped the industry. When the government had the opportunity to establish guidelines – such as only writing checks to the banks based on the volume of new loans they were writing in order to stimulate the economy – it simply wrote checks to the financial institutions with little oversight or accountability.
Terry Ross, the broker-owner of TR Properties, will answer any questions about today’s real estate market. E-mail questions to Realty Views at firstname.lastname@example.org or call 562/498-1049.