A survey of more than 20,000 recent home shoppers offers some surprising insights into the psyche of the modern-day buyer.
When John Burns Real Estate Consulting principal Mollie Carmichael wrapped up work on the firm’s first annual Consumer Insights survey last spring, she came away with one overarching finding — home design appeared to be much more important to consumers than most would think. A year later, having just tallied the results from the 2012 survey, which gathered input from 20,037 recent home shoppers, Carmichael can emphatically claim that the finding is no fluke.
(Note: This article was published as part of Professional Builder's July 2012 Design Innovation Report. For more articles from this special report, click here.)
For the second year in a row, consumers surveyed by John Burns show that home design is above price and rivals location as the most important characteristic when purchasing their next home (see chart 1 below). Even when the data is broken out by region, market, submarket, and virtually any demographic category, home design tends to end up among the top of the list. It’s a trend that, while somewhat surprising on the surface, makes a lot of sense given the state of the housing market. With housing affordability at record levels in most markets and submarkets, it takes something much more compelling than having the best price to get people to move.
“It’s not that design hasn’t always been important,” says Carmichael. “But today, it is more important than ever, and it is really coming out in the numbers. People have a lot more choice today, and frankly their risk is greater. Overcoming all of the negatives they hear on the news and are experiencing in the market requires a significant emotional commitment. Consumers today will be drawn in by price; however, they need the positive emotion of great home design coupled with a great value to get people to commit during what is still a very distressful time.”
In short, as Carmichael says, “price can get shoppers in the door, but design will close the deal.” That means if builders are holding onto their “value-box” plan designs, the chances are their only strategy is to drop price in order to achieve sales today. Today’s builders can achieve stronger margins and sales velocity by providing the right design and value.
For the second straight year, a survey of home shoppers by John Burns Real Estate Consulting shows that home design is above price and rivals location as the most important characteristic when purchasing their next home.
The challenge for builders is finding the recipe for developing winning designs that are keenly targeted at their potential buyers. The “secret sauce” varies by location, buyer type, and price point, according Carmichael, who says success comes from knowing your market and buyers better than anyone else. Who lives there? Is the household composition changing? What’s the qualified buyer profile in each price range? What’s available in the resale and new-home markets? How can builders and developers set themselves apart? How do recent home buyers live? What do they value most and least? What do they wish they could find in the housing market? These are some of the questions that all builders need to have solid answers for if they want to nail their next generation of home designs.
“It’s interesting out there in our industry today given the market challenges and the desire to provide the right home and community designs,” says Carmichael. “I have had more than one developer share that their buyers or builders may not understand or appreciate good design.”
Great rooms are preferred, particularly in the more affordable price points. Formal spaces have become privileged spaces for the more affluent buyer that can afford them.
At the end of the day, she adds, both the builder and consumer want the best design at the right price. However, the challenges are providing the right balance of design and price to today’s diversified consumers.
“The most critical thing to understand is that all buyers do not have the same taste and the same budget as many of the executives planning new developments or homes today,” she says. “The key is to provide design elements that are strong enough to draw the buyer in no matter what the price point is. As a result, investing in the right designers, coupled with understanding what consumers want by lifestage and price point, is more critical for successful profits today than ever before.”
Based on the results of the Consumer Insights 2012 survey, here are a few things for builders and developers to consider that can help with today’s designs:
Design starts from the inside out for most consumers — particularly if they have children. The relationship of the social spaces within your floor plans — both inside and out — is critical in your home designs.
Great home design does not have to cost more. Builders can be successful at achieving great design from the inside out on any budget. However, design or beauty is truly in the eye of the beholder. Understanding the differences by lifestage and price point is essential.
Great room is preferred over formal layouts. While younger buyers tend to gravitate to large, open layouts more than mature buyers, both groups prefer great room layouts over formal kitchen, dining, and living rooms. However, the more affluent the buyer, the more likely he or she will prefer formal rooms. “Formal spaces are a privilege,” says Carmichael. “People today are a little bit more realistic about the kind of square footage they can afford.”
There’s more to outdoor living than entertainment value. When asked why outdoor space is important, the most commonly cited response was, “To provide privacy between me and my neighbor.” Most builders sell the entertainment and recreational value of outdoor living spaces, but privacy should be a key factor as well. Courtyards, covered patios, balconies, and fenced-in back and side yards are some of the popular amenities that promote outdoor privacy.
Indoor-outdoor connection is a must. Whether it’s a wall of windows that offer daylight and views or patio doors that provide easy access to the outdoors, buyers place high value on having a strong indoor-outdoor connection.
Buyers prefer a casual look. Across all age groups, survey respondents generally leaned toward more casual and comfortable styles versus formal home designs and interior layouts. “There is clearly a greater preference for natural materials such as rock, stone, and wood on the interiors and exteriors,” says Carmichael. “In addition, the more casual exterior styles were preferred nationally over more traditional exteriors. However, this does vary somewhat by location.”
The desire for contemporary interior style has risen dramatically. Nationally, contemporary was the second most favored style on the interior, says Carmichael. On average, people are attracted to clean lines and a contemporary feel inside the home, but they are more hesitant to commit to this style long term on the exterior, as this could appear dated in 10 years. Contemporary on the exteriors rated among the bottom contenders. “For example, last year, the most popular retailer preferred was Pottery Barn,” says Carmichael. “This year, we’re seeing companies like Crate and Barrel and Ethan Allen pop up with slightly more contemporary styles.” She advises builders to update their specifications to incorporate more contemporary products, like faucets, fixtures, sinks, and cabinetry.
Only 4 percent really want urban living. Among all age groups — even the Gen Y’s —suburban or single-family detached is still preferred. Gen Y’s without children are more likely to choose attached or rental in locations that are closer to employment centers. Marriage and children change these preferences, as they are looking to play with their bikes, trikes, toys, and other children.
Personalization is a must. “Personalization is the greatest differentiator that you can offer to new-home buyers over a buyer that will purchase a used home,” says Carmichael. Give them choice.
Family rooms, great rooms, and large laundry rooms/ home organization centers are the most important spaces to shoppers when considering their next home.
Suburban neighborhood designs remain the top preference among home shoppers today — well above urban living, according to the Consumer insights 2012 Survey.
While privacy is a big reason for outdoor space, almost half of respondents said they use their outdoor space to entertain family and children.
This survey was conducted by John Burns Real Estate Consulting, LLC from October 2011 to January 2012. John Burns Real Estate Consulting partnered with home builders across the United States to distribute the online survey to prospective home buyers. An incentive of one $500 gift card was offered. By the closing date, a total of 20,037 consumers had responded to the survey.
Detailed Survey Findings
The survey results presented in this article reflect the national findings from the Consumer Insights 2012 survey by John Burns Real Estate Consulting. Results are also available at the regional and metro level, and results may be customized by buyer type, lifestage, price point, or monthly housing payment. For more information, please contact John Burns Real Estate Consulting at firstname.lastname@example.org or 949.870.1200.
For more articles from Professional Builder's special Design Innovation Report, click here.