In a research study conducted by Better Homes and Gardens in January surveying more than 2,000 home enthusiasts from across the country who bought a new home in the past 10 years or plan to build one in the next 10 years, more than half of the respondents said they wanted green building and remodeling options presented to them. This number jumps to more than two out of three in the millennial age group.
Among the features or designs most frequently rated as “essential/must have” before a consumer would consider buying a specific home, four were energy-related and two were exterior features.
Energy-related features included a high level of insulation (48%), exhaust fans (48%), Energy Star-rated windows (36%) and equipment-based energy saving measures (34%).
A laundry room topped the list, rated essential by 55% of the survey respondents.
A walk-in pantry was rated as essential/must have or desirable by 86% of those surveyed, followed by an island work area (80%), built-in microwave (72%), drinking water filtration (69%) and special use storage (wine rack, spice drawer, pots and pans, cabinet, etc.) by 16%. Granite/natural stone was the most popular kitchen counter material.
A linen closet topped the list of bathroom features, with 89% of respondents categorizing it as essential/must have or desirable followed by an exhaust fan (88%), separate shower enclosure and water temperature control at 79% each.
More than two out of three respondents preferred nine-foot or higher ceilings on the first floor.
More than half of the respondents said they would like a minimum of four bedrooms, while 39% would accept three bedrooms.
Twenty-eight percent of those surveyed preferred at least three full bathrooms, one-third would like to have 2-1/2 bathrooms and 31% expressed satisfaction with only two bathrooms.
On the front exterior, brick was the most preferred, followed by stone, vinyl and stucco.
Exterior lighting (33%) and fenced yards (33%) were the two outdoor features that also made the list.
The median home size of those surveyed was 1,835 square feet and the respondents said they wanted a median of 2,354 square feet in a new home, an increase of 38%. The home shoppers estimated median value of their current homes $227,500 and expected to pay a median of $241,699 for their new home, about 6% more.
Is this a realistic expectation?
A conventional assumption in the lending industry is that a family can afford to spend 28 percent of its gross income on housing – principal, interest, taxes and insurance. Using the median price of $241,699 which the home shoppers in the survey expected to pay and assuming a 90% 30year fixed rate mortgage at 5 5/8%, the monthly principal and interest payment would be $1,252. A 90% loan would require private mortgage insurance which at 0.5% adds $91 a month to the monthly payment. Property taxes at 1.25% add $252 per month and homeowner’s insurance at 0.5% adds $101 a month. That’s a total housing cost of $1,696 a month or $20,352 a year. At 28% of gross household income, that median priced home would require a household income of $72,686 a year. According to the U.S. Census Bureau, the median household income in the U.S. in 2006, the last year for which we have data, was $48,201.
The median price of the 2,354 square foot home for which the home shoppers expected to pay $241,699 equates to cost of $103 per square foot while the estimated median value of the 1,835 square foot at $227,500 equates to cost of $124 per square foot. While the escalation in the cost of building materials has slowed, those cost continues to increase. Is it realistic to expect the cost to construct that new home with the higher level of insulation, the Energy-Star rated windows and appliance, the granite/natural stone countertops, fenced yards, etc. for 20% less than the value of their existing home?
When asked the best way for a Builder to spark a buyer’s interest in today’s market, the Better Homes and Gardens survey found that 44% of the respondents prefer bonus home amenities and upgrades; 42% would like a discount on the price of a new home; 37% want the builder to buy their old home at a fair price; and 31% desire free professional decorating and landscaping advice. Is it realistic to expect a Builder to not only price his homes for less than it costs to build them, but to also give bonus amenities and upgrades and / or discount the price? Is it realistic to expect a Builder to purchase a buyer’s old home at fair price? Not if the expectation is that a fair price for their old home is 6% less than the cost of the new home they’re purchasing which is not only used but 38% smaller than the new one.
I love what I do. I love designing and building my clients' dream homes, especially when those clients have realistic expectations. Our approach to home building is designed to help our clients understand what is realistic and what is not. When clients have unrealistic expectations, that love of what I do can be lost. As we state on our website, we are extremely proud of the fact that many of our clients have become some of our closest friends. Regrettably, those clients who had unrealistic expectations are not among them.
Do you have realistic expectations about your new home? If so, I would love to work with you.
President / Builder - Chuck Miller Construction, Inc.