Stable interest rates means buyers can load up on the extras.
Heather McCune's Editorial Archives
Smart builders are catering to the ever-growing wish list of new home buyers with more available options and upgrades than ever before. In today's hot new construction market, the ability to personalize a home is often the factor that separates one builder from another with discriminating buyers.
"The first thing that buyers gauge during a higher interest rate climate is location, space and price," explains housing analyst G. Tracy Cross of Tracy Cross & Associates. "Now that interest rates moved lower and have stabilized, buyers are asking for more upgrades and amenities."
Five years ago, Cross said the average buyer of a new townhome or condominium in Chicago spent roughly eight percent of the sales price on upgrades. Today anywhere from 15 percent to 20 percent of the buyer budget is going for extra-cost upgrades.
This shift is reflected in the higher townhome and condominium prices recorded in the city this year. The average price of new-construction townhomes and condominiums in Chicago increased to $370,732 or $248 a square foot in the second quarter of this year, up from $341,784 or $244 a square foot for the first three months of 2000.
Buyers are spending big on fireplaces with granite or marble hearth and surround, oak floors, berber carpeting, optional dens and home offices. The kitchen and bath continue to be rooms that buyers want to personalize. Gourmet kitchens include granite countertops and island and top-of-the-line appliances. Master baths feature a separate shower, whirlpool or soaking tub and marble floors and surround. Another big-ticket area is optional outdoor space, including roof decks and balconies.
Among suburban new home buyers the trend is the same. Among mid-price point buyers, the most popular features and extras include:
That buyers want options is indisputable; how to handle the process is. Some builders are moving to a "what you see is what you get" pricing strategy that includes the target buyer''s most desired upgrades. Others are creating package prices with a different set of upgrades available at each level; the good, better, best strategy. Still others, and the vast majority, let buyers pick from a selected list of offered features. No matter what the approach, all evidence suggests that personalization is becoming an all-important part of the new home sales process.
Heather McCune is the Editor-in-Chief for Professional Builder and Luxury Home Builder. Please email her with any comments or questions regarding her column.