Investment propertyNew-home Buyers in West Buying Bigger Houses, Choosing More Options
New-home buyers in the West are purchasing larger homes and prices are
creeping ever higher, due in part to low inventories, according to a recent
survey of new-home buyers in four Western states. Nonetheless, new-home
sales across the country are setting new records.
Sales of new single-family homes surged 8.1 percent to a record high
seasonally adjusted rate of 1.03 million units in May, according to the
Commerce Department. While the Northeast realized the largest gains, the
West continues to see single-digit increases.
"Low interest rates and the solid investment potential of homes are
encouraging more buyers than ever to go forward with a new home purchase,"
said Gary Garczynski, president of the National Association of Homebuilders.
In addition to the housing market providing muscle to the economy, owners
spend an average of $8,900 to furnish, decorate, and make improvements in
the first year following a new-home purchase.
In the recently released VISION 2002 survey - taken from more than 1,300
new-home buyers in Arizona, California, Colorado, and Nevada - new-home
buying patterns and preferences were revealed. The survey, conducted by
National Survey Systems, Color Design Art, and the Meyers Group, a
residential real estate research company, was released at this year"s
Pacific Coast Builders Conference, a gathering of nearly 24,000 home
building professionals held recently in San Francisco.
One overriding theme drawn from the survey is that despite the strong sales
in the West and throughout the country, affordable homes continue to move
out of reach for an increasing number of families.
In California only 29 percent of households can afford the median-priced
home; in Phoenix 58 percent; and in Las Vegas some 48 percent can pay for a
median-priced home.
"The median price of new homes is up almost 10 percent from 2000," said Las
Vegas broker George Durkin.
The resulting equity increases, particularly in California, are offsetting
the affordability crunch, the survey says. Short-term, that means houses get
larger and prices stay high; long-term, it means more Californians may be
going out of state to find affordable homes.
Some 39 percent of the survey respondents said they were motivated to
purchase a new home because they wanted or needed more space. Among first
move-up buyers, a full 60 percent said they wanted or needed a bigger home.
The NAHB also sees that trend.
"Every age group wants a little larger home even though the family size is
shrinking," said Gopal Ahluwalia, NAHB"s director of forecasting, at the
International Builders Show, held earlier this year.
The average size of a new home has mushroomed from 1,500 square feet in 1970
to 2,330 square feet in 2001, according to the NAHB.
Many - 52 percent - said the most influential room in the house is the
kitchen. The family room runs a close second, followed by the master bedroom
and living room.
Other industry professionals also discussed that trend earlier this year.
"In 2002 we don"t want homes that impress friends as much as we want homes
that comfort our families," said Joan McCloskey, executive building editor
of Better Homes and Gardens magazine. "The move is to less ostentation. The
preference is for simplicity."
At the same time, buyers still want the latest products and amenities, she
said, noting that the kitchen "traditionally makes or breaks the sale of a
house."
And when it comes to the extras, Western homebuyers are spending plenty.
Some 85 percent of the buyers said they personally chose specific options
and upgrades - with a hefty price tag. The average amount spent was $22,600.
For homes costing more than $500,000, the figure was $38,800. Even
entry-level buyers spent nearly $13,000 on options.
The top-four options that buyers are willing to pay for are shelves and
bookshelves, crown moldings, built-in home media centers, and interior
window shutters.
When it comes to energy efficiency, 86 percent of experienced buyers said
energy efficiency is extremely or very important in their home-purchase
decision. Some 81 percent of first-time buyers said the issue is
significant.
And homebuilders are responding. The NAHB, in its publication, "Building
Greener, Building Better: The Quiet Revolution," outlines the ways
homebuilders are striving for energy-efficient homes:
Land planning and design techniques preserve the natural environment
without disturbing the land, including site development that reduces
erosion, minimizes paved surfaces and runoff, and protects trees and other
greenery.
Water conservation in indoor and outdoor environments.
Heating and cooling (HVAC) energy efficiency, as well as more
environmentally friendly appliances and lighting.
The selection of recyclable, durable building materials.
Waste reduction by reusing and recycling during the construction process
and throughout the life of the home.