by Phillip B. Burum, DR Horton,
President, Building Industry Association (BIA) Baldy View Chapter
2019 may be proving out to be the year that brings a new hope for homebuyers. The trend started in the spring and is now carrying through to the fall as we enter the new season with another favorable adjustment to the 30-year mortgage rates. According to the National Association of Home Builders (NAHB), the Federal Home Loan Mortgage Corporation (Freddie Mac) is reporting that mortgage rates continued to decline for the eighth straight month. As of August, the 30-year Fixed-Rate Mortgage Commitment Rate fell by 15 basis points to 3.62 percent from 3.77 percent in July. That may be particularly good news for homebuilders as the next generation of homebuyers – Millennials - is finally beginning to show up in force in the marketplace, albeit with specific preferences and demands.
A report released last month by the NAHB provides some insight into the wants and needs of the Millennial homebuyer. The report analyzed four NAHB home buyer preference surveys conducted in 2007, 2012, 2015 and 2018; which examined housing preferences of those born between 1980 and 1996. The report concludes that there are “a good number of interesting areas where Millennials’ current differences from older generations reflect unique, lasting preferences,” according to special report author Benjamin Coomer of the NAHB Economics and Housing Policy Group.
The most notable preferential shift is that Millennials show an increasing desire to live in the central city. The overwhelming majority of homebuyers still prefer to live in suburban areas but this trend towards city life is noteworthy as it appears consistent among this generation across all spectrums of economic standing and geographic location. Millennials also show a preference for new home communities with modern amenities over custom-built homes and prefer modern interior architectural features such as wet bars, built-in kitchen seating, and exercise rooms.
Another trend shows that Millennials are willing to accept, and in many cases are deliberately seeking out, smaller homes and smaller lots. This trend, in part, is a way to address affordability but the preference of living without unnecessary, or excessive, space has been discussed in similar reports. Builders are responding as - according to second quarter 2019 data from The United States Census Quarterly Starts and Completions by Purpose and Design and NAHB Analysis - the size of the median new single-family home ticked down again to 2,245 square feet in 2018.
The most wanted features for Millennials in 2018, measured by total percentage of respondents, include features like Energy Star ratings and front porches. His and her baths, along with kitchen window seating and media rooms round out the list of most desired features. This generation appears to be trending towards efficiency and features that accommodate their specific lifestyle. Exercise or game rooms, for example, are replacing the formal living and dining rooms on the ‘must have’ list of Millennials.
In the era of the housing crisis, where our region is producing approximately one third of the housing units that the market is demanding, it is important to listen to the buyers and not remain hung up on the trends of the past. We need to build the homes that buyers want to buy. Studies such as these help today’s homebuilders plan for the homes and the new home communities of tomorrow.
Low interest rates may add fuel to a fire in desperate need of oxygen but until builders and governing agencies get on the same page regarding what needs to be built, even Mark Hamill could not bring enough new hope to the idea of stabilizing a horribly imbalanced housing market. There is a common misconception that an architectural style or enhancement is what makes a neighborhood, and therefore a city, successful. The simple fact is that great homeowners make great neighborhoods. Great neighborhoods make great cities. Satisfy the needs of the homebuyer and you will have great homeowners.
The Building Industry Association (BIA) Baldy View Chapter seeks to advance the opportunity to attain the American Dream of homeownership. For more information on homebuying, remodeling, or just enjoying your home, visit our www.biabuild.com website. For more information on why Mark Hamill represents a New Hope, ask your father, mother, son, daughter, or local Jedi master. Have a great Autumn.