Availability, Affordability Hamstring Potential U.S. Home Buyers in 2018
Home Owners Stay Put and Renovate Instead
According to a new survey by the National Association of Home Builders, the lack of affordable, buildable lots and the scarcity of labor affected home production in 2017. While starts increased by 9 percent over 2016, the characteristics of these new homes stayed largely the same.
The average home size, at 2,622 square feet in 2016, was essentially unchanged in 2017, averaging 2,627 square feet. Forty-six percent had four bedrooms or more compared to 45 percent in 2016; 37 percent had three full baths or more compared to 35 percent in 2016.
Housing availability and affordability remain a serious issue, and it's reflected in these findings, said Rose Quint, assistant vice president of survey research for NAHB.
Further, 65 percent of those surveyed don't believe it's going to get any easier in 2018. Seventy-nine percent of these prospective buyers can only afford half the homes in their markets, Quint said. "These potential buyers see a problem with housing availability. They know it's a tough nut to crack, but they are not deterred. They are still planning to buy a house in the next 12 months."
Homes built in 2018 will most likely include a walk-in closet in the master bedroom, separate laundry room, a great room, nine-foot ceilings on the main floor and granite kitchen counters. They are also very likely to contain energy-efficient features such as low-E windows and Energy Star-certified appliances and windows, the survey said.
Home owners are staying in their homes longer than they used to - about 12-13 years, on average - and they are anxious to make changes. Traditional Home executive editor Jill Waage and Better Homes and Gardens home design editor Amy Panos say their surveys show that 80 percent of respondents - female home owners - say they want to make some home improvements in 2018, from freshening up their paint colors (48 percent) and changing their flooring (43 percent) to making improvements in the kitchen, bathroom or outdoor spaces. Those are the top five renovation projects anticipated by survey respondents this year, whether that home is now owned by a "mainstream" (defined as an income of less than $125,000 per year) or a "luxury" buyer.
Mainstream buyers are much more likely to tackle do-it-yourself projects and make compromises, such as choosing cost over quality, to get results: brightly painted kitchen cabinets and big-box lighting solutions rather than custom installations. They place a premium on energy-efficiency improvements, likely because they live in older homes with outdated heating systems.
The "luxury" owner is looking at high-end outdoor fireplaces and furniture, a bathroom renovation that includes a spa shower or expansive, free-standing bathtub and a kitchen with all the bells and whistles, like built-in wine coolers and warming ovens.
One trend that Better Homes and Gardens is watching, Waage and Panos say, is the great room. A staple of new home design for more than 30 years, the combined kitchen, dining and family room may be losing some steam. Whether that pans out into more separate and defined living spaces is unclear, and it's too soon to tell, they said.
Meanwhile, there is a potential market for "tiny houses." The NAHB survey found that 53 percent of respondents might consider purchasing a home of 600 square feet or less in size - at some point in their lifetimes. More Gen Xers and millennials are open to the idea than baby boomers and seniors.