How Are Builders Adjusting to Meet First-Time Buyer Demand?

Despite housing affordability challenges, demand from young, first-time homebuyers is growing. Even with the first-time buyer age rising to 38 years old, the youngest Millennials and older Generation Zers will enter their prime household formation years in the next decade. According to John Burns Research and Consulting (JBREC), 76% of this age demographic say they want to own a home one day, but cost remains a barrier.

How are home builders responding to ongoing cost constraints?

Affordability challenges are putting pressure on the next generation of new buyers, causing builders to come up with creative solutions to capture entry-level demand and ultimately improve affordability, including smaller footprints, higher-densities, and more efficient layouts that help manage their costs that bring down home prices.

Additionally, builders are finding geographic opportunities, such as on the outskirts of second-tier market suburbs where land is often cheaper and more abundant.

But that strategy alone may not be enough to entice young buyers because that cohort gravitates to amenities available in city centers. As such, builders and developers should provide and emphasize the right mix of amenities in new communities to help entice more buyers. 

Despite efforts, local zoning policies are still a challenge for builders 

Although builders are trying to make their communities more affordable, policies at the local level can sometimes get in the way. Policies that streamline the development of entry-level homes—such as ADU allowances, reduced parking minimums, and streamlined permitting approvals—are ultimately needed to improve affordability.

Understanding young buyers is key to building homes they want to live in

• Gen-Z Homebuyer Must-Haves: Gen Zers are willing to make certain compromises in order to buy a home as long as builders meet their need for functional spaces. 
• What Gen-Z Buyers Really Want in a Home: These homes showcase quality building and design techniques that make homes more attainable for the youngest group of homebuyers.