248 What Home Buyers Really Want - Rose Quint Dec 18 2024

Greg Bray: [00:00:00] Hello, everybody, and welcome to today's episode of The Home Builder Digital Marketing Podcast. I'm Greg Bray with Blue Tangerine.

Kevin Weitzel: And I'm Kevin Weitzel with OutHouse.

Greg Bray: And we are excited to have joining us today, Rose Quint. Rose is the Assistant Vice President of Survey Research at NAHB. Welcome, Rose. Thanks for being with us today.

Rose Quint: Thanks, Greg. Thanks for the invitation to be on your podcast. I'm happy to be here and share with you some of my research.

Greg Bray: Well, we're excited to get into that. But before we talk about research, let's just get to know you a little bit. Give us kind of a quick background about [00:01:00] yourself.

Rose Quint: Happy to do that. I guess the biggest news in my life right now is that I am the proud mother of two smart girls who are attending the University of Virginia and Yale University. So, that's my biggest presentation part right now, but I have a master's degree in economics from Virginia Tech as well. And I've been with the Home Builders for over 20 years.

Kevin Weitzel: Number one, two very prestigious colleges. Number two, before we dive into the research you've done, and before we go into anything that's home building related, we'd like to find out one interesting factoid about yourself that doesn't include family, home building industry, or work.

Rose Quint: I love Zumba and strength training. I do that almost daily after work, and it's become a habit, hard to break since COVID. Since the pandemic, that's all I do in the afternoon, especially since the girls left to college. So, that's a quick fact that no one knows about me.

Greg Bray: And that's after you leave the office, right? You're not doing Zumba at the office.

Rose Quint: Right. Definitely not [00:02:00] happening while I'm doing research. Absolutely. Yes.

Kevin Weitzel: But doesn't it teach you some steps, so when you're walking from office to office, you can have a little bit more pep in the step?

Rose Quint: Well, you know, it definitely keeps my body in shape, which is number one on health. You know, I do it for health reasons. You know, it's not something that I was doing before COVID. It was a fantastic byproduct of being at home 24/7.

Greg Bray: Well, Rose, you are in the research department, and I don't know if everybody knows what the research department does, so tell us just a little bit more about what you guys are about and the kind of services that you're providing for builders.

Rose Quint: So, NAHB is a trade association, as you know, we have over 140,000 members. They include builders, remodelers, land developers, architects, engineers, you name it. Our mission is dual, right? We are in the business of protecting the American dream of housing opportunities for all, but also helping our members achieve professional success. In that mission, in that latter part of that mission is research.

In my part of the world at [00:03:00] NAHB, we conduct over 50 surveys every year. I survey builders, I survey remodelers, I survey homebuyers for example. Some of that data becomes economic indicators, very well-known economic indicators you might have heard of, like the Wells Fargo and HP Housing Market Index or HMI, and some of the data also becomes publications on topics such as homebuyer preferences, which we're here to talk about today. But I also produce publications on benchmarks for profits, for average profits, for remodelers or for builders, or the average compensation that builders pay their employees. So, it's a deep and wide research agenda that we have at in NAHB.

Greg Bray: No, that sounds like a lot of useful information and probably I bet some of our listeners have not fully tapped into some of that and using it because, you know, it probably takes a little work on their part and they're not paying attention. But like you mentioned today, we want to dive into one of those specifically and that's your 2024 edition of, I believe it's called What Home [00:04:00] Buyers Really Want. Tell us why that particular topic did you guys decide to kind of focus on. And how long have you been working on this one? And what were some of the goals behind this particular topic of research?

Rose Quint: Yeah, thanks Greg for that question. So, as I said a minute ago, one of our missions is to help our members achieve professional success. And so, over 20 years ago, NAHB decided to conduct very thorough research on what buyers want, what amenities in the home and the community, people are looking for in their homes, and what features are essential and better yet, which ones are emerging, which ones are becoming more popular.

For that reason, we produce What Home Buyers Really Want. The study is done every 2 or 3 years. It is based on 3000, roughly, recent and prospective homebuyers. These are people who bought a home in the previous three years or who are looking to buy one in the next three years. And what's very important about this sample, how we select it, is that they are representative of the U.S. population in terms of [00:05:00] age, of income, of race, as well as geographic location in the country. So, that our goal here is to provide builders and architects, and product manufacturers, the most recent and the most accurate information so that they can build and produce the homes that people want.

Kevin Weitzel: So, do you ever have any head scratchers when you're doing these surveys, like just, you know, some stuff that comes out of woodwork that's a big surprise to you or the team?

Rose Quint: Well, in this particular iteration of the study, as I said, we do it every two or three years, one thing stood out to me. It was the first time we included it in the survey, by the way, we asked buyers what material they wanted to frame their home and only 37 percent of them said they would prefer lumber, wood for framing of their home.

Which to me, Kevin, is an extraordinary finding because over 90 percent of the new homes in the U.S. are framed with wood, with lumber. And so, to have only 37 percent of buyers say [00:06:00] that that's their preferred framing material was quite surprising. On the other hand, about a quarter of them want concrete framing, and another quarter or so want steel framing. Which, you know, when you think about the hurricanes that just happened, it kind of makes sense. But they said that despite the additional thousands of dollars, tens of thousands of dollars that it would cost to have that kind of thing. So that was surprising to me, most definitely.

Greg Bray: And do you ever get like this one response from someone named Mr. Weitzel that you just go, we can't even use this. We have to throw this out. This is too much of a head-scratcher.

Rose Quint: First of all, the responses are anonymous. We actually hire a third party to collect the data from households. We don't own household panels. It's all anonymous. For the most part, the surveys are fully completed. They're very long surveys, as you might imagine.

Greg Bray: That is interesting, though, that framing is not matching up with what builders are offering. Now, when people answer a question like that, do they acknowledge that it might cost them a lot more money to have a [00:07:00] house that's framed differently? Or are they just kind of more of a preference of, well, I think this is better for the environment or?

Rose Quint: So, objectively, we give them a ballpark figure of how much it would cost to have a different kind of framing other than lumber, which is the standard, right? Over 90 percent of new homes are built with lumber. They read that in, right? Logically, they're rationally absorbing this information and still choosing to say that their first preference would be one of those other materials. We don't go into why, or their psychology behind the reason for that answer, but I am inclined to think that it has to do with safety.

Greg Bray: No, that makes a lot of sense. Yeah, there is a tendency for us to want to go to the why, and you can't always get the why. All you get is the actual information about how they feel, but it would take a different kind of study to get at the why's probably.

Rose Quint: Right, the why's qualitative work. The survey is quantitative.

Greg Bray: See, that's how smarter people than me say it, Kevin, qualitative versus quantitative.

Rose Quint: It's just doing this every day. That's it.

Greg Bray: So, when I was looking through some of the data, [00:08:00] Rose, one of the things that I noticed is that there is a trend toward wanting smaller sized homes, especially I think you guys have been doing this for a long time. So, you've been looking back for many years. What are you seeing from a home size difference in what people want today versus maybe in the past?

Rose Quint: So, yeah, so as I said, we've been doing this research on home buyer preferences for a long, long time. Twenty years ago, the typical homebuyer was looking for somewhere around 2,260 square feet of finished space in their home. Fast forward to now, and that number has shrunk by about 10%. It's about 10 percent smaller, so it's about 2,060 square feet now. That's finished space, by the way.

And builders are responding. In 2023, the typical home built in the U.S. had 2,000 square feet of finished space, 2,000. That was the smallest median home size since 2010, in 13 years. The peak, by the way, was in 2015 when the [00:09:00] median size reached almost 2,500 square feet.

Greg Bray: How do we measure if we can, whether that's builders just responding to price point and material costs and things and so they're offering smaller homes, or whether they are just actually talking to their buyers and saying, Oh, you don't want it that big. Okay, we can do something different. Any thoughts there?

Rose Quint: Sure. We do a lot of tracking around home sizes, as you might imagine. So, let me give you a little bit of a historical perspective on home size. After the housing recession in 08 and 09, home size really tanked, and then for a number of years from about 09 through 2015, the homes got bigger and bigger and bigger. The share of them with 4 more bedrooms increased, the share of them with 3 or more bathrooms increased, the share with 3 or more parking spots in the garage increased. The house just got bigger and bigger through 2015.

That had to do a lot with the fact that underwriting became so difficult and only wealthier homebuyers with equity had a [00:10:00] chance to even get a mortgage. And so, the houses that got built were serving that level, the only players that were left standing during that very difficult underwriting period. Then it all peaked in 2015. Underwriting became a lot easier and first-time homebuyers came back into the market.

And so, we've seen a decrease in average and median home sizes starting in 2015. It's not a one or two-year trend. It's been happening for about a decade. Last year, the decrease in home size was just a continuation of a drop that began a decade ago. So, it's a combination of builders listening to the market to your specific question, but also after 2020, it had to do with supply chain disruptions and increases in materials.

Greg Bray: So, as we look at kind of the smaller size, it also looks like they're still preferring single family, kind of the traditional detached home, but it felt like that might be changing a little bit too. How do you kind of measure the different type of home [00:11:00] style, I don't know if style is the right word for that, that folks are looking at.

Rose Quint: I think the right way there is structure type, Greg. So, in the survey, we asked buyers what was their first option if they were buying a new home. As you said, 66 percent of them, 2 out of every three buyers, are going to want to buy a single-family detached home. Detached homes remain at the top of the food chain in new build. Compared to a townhome, only 16 percent of home buyers said they would prefer to buy a townhome, and only 10 percent would prefer a multifamily unit.

So, the preference for a detached home is very, very strong. It remains supreme. We've seen this over time. It has remained so over the last 2 decades. And in fact, we added a new question to the survey this year because we wanted to try to measure what kind of a discount people would need to trade from a detached unit to a townhome.

And so, we asked, if you could buy a townhome that was of the same size, same number of square feet, it was [00:12:00] in the same location, and had the same quality materials as a single-family detached unit, what kind of a discount would you need to make that trade-off? The average answer was 30%, thirty percent.

So, in other words, for the average buyer, he or she wouldn't even consider switching from a detached to a townhome unless it was 30 percent less expensive. And this is for a unit that's comparable in every way, theoretically, other than in the amount of land that surrounds it. So, quite a significant, relevant point for detached homes.

Kevin Weitzel: Having a bad back myself and now three spinal surgeries, I don't want to do landscaping ever again. So, I will be a townhouse fan, a raving lunatic fan of townhouses for the rest of my existence.

Rose Quint: Right. And you're with that 16 percent minority, Kevin, who are with you there. But we have 66 percent of buyers who continue to say, and they've been a majority across time, [00:13:00] historically, in our surveys, who say they prefer the detached home.

Greg Bray: Were there any type of geographic differences in those kind of preferences where folks in more urban areas were more open to townhome living versus those who are not in the city?

Rose Quint: Some. By the way, that's a very good question, Greg, because all the findings that I'm talking about here are for the average buyer, right, when we analyze everybody together. But if you look in the book itself, you'll be able to find all of these numbers broken down by buyers of different races, different age groups, different price points, how much they expect to pay for the home, different incomes, and also different geographic areas. Which we use census divisions. And so, to your point, in divisions of the country that have big cities, the answer is slightly less so towards detached units, but the majority is still there.

Greg Bray: Well, and I guess that's a great point, Rose, is to remind our listeners that we're just scratching the surface in our conversation today. There's a lot more information available in the full book. We'll share where you [00:14:00] can get that before we finish up.

Kevin Weitzel: I almost think that there's a little bit more to unpack on the flip side of that equation. So we're talking about the single-family homes being a preference and maybe being a little less so in the urban areas, you know, where you'd have more townhomes and multifamily. However, across sprawling Western United States, you know, in the Wyoming's of the world, the Montana's of the world, they don't really do a lot of townhomes. So, it's almost like an absolute foreign affair for those types of communities. So, you would think that they're already skewed toward the single-family home lifestyle anyway. Would I be correct in that assumption, or does the data not show that? Or am I just crazy?

Rose Quint: No, no, that's a fair statement. But also keep in mind that the vast majority of new construction and new home sales in this country happen in the South and in the Pacific area of the West. So, the Midwest and that mountain region of the U.S., those two regions have the least number of [00:15:00] houses sold and constructed every year. So, yes, the single-family detached home there definitely is king, but they also see the smallest share of construction every year.

Kevin Weitzel: I was looking actually at the stats one time that the NAHB put out, and if I remember right, I think it was North and South Dakota combined, both states, sell less homes than the city of Charlotte alone.

Rose Quint: Right. Yes. So, we have to keep that in mind that that's a little geographic trick that a lot of people don't think about Yes, there are tons of states that together don't come close in terms of construction or sales. Austin, Miami. Tampa. Atlanta.

Kevin Weitzel: Jacksonville. Yeah.

Rose Quint: Jacksonville. Yes.

Kevin Weitzel: Yeah.

Greg Bray: So, Rose, related then to the fact that they prefer single-family detached homes, there did seem to be some interesting changes around multi-generational homes. So, even within the single-family, they still want something maybe a little different as far as how we fit inside that single [00:16:00] family home.

Rose Quint: So, the results around multi-generational homes are very interesting. In general, about 45 percent of buyers said that they would be interested in buying a home that was designed for three or more generations. The reason I say the results are very interesting is because there are huge and significant differences among white buyers and minority buyers when it comes to this finding.

On one hand, you've got about 37 percent of white buyers who say that would be something they would like to do, a home design for three or more generations. But if you look at Asian buyers or Hispanic buyers, it's over 70%. And among African American buyers, it's over 60%.

So, 45 percent in general, but again, builders and architects looking at the study, they can go to the column in the tables in the back of the book that say, okay, I'm looking at this profile, the buyer, what do they want? How do they feel [00:17:00] about this? And so, if they have a lot of minority buyers in that profile, multi-generational homes are going to be a big hit.

Greg Bray: That's fascinating. And that's why this research is so interesting is because you do have to break it down and decide what does your local market have available to you to sell to and what are those people interested in. And I'm sure there's some cultural differences coming into play there as to who they want to live with and how long they want to live with them that are part of that for sure.

I saw in there that all the smaller features, so we've been talking about larger structure types and things, but there's a lot more nuance available in here. What are some of these features that people really care about in their home, and how did those even make the list? What'd you decide to ask about? It's kind of interesting to me too.

Rose Quint: Yeah, so we wanted to get into a lot of very fine detail about the home. And so, we provided respondents with a list of more than 200 features of the home and the community. The list was very comprehensive, right? [00:18:00] Kitchen features, bathroom, green features, outdoor, accessibility, technology, community. We gave them a scale. For each of those features, they would tell us is it essential, is it desirable, are you indifferent or do you not want it. That way we had a consistent scale that we could compare apples to apples for all of these dozens and dozens of features.

These are things that have been built over time and they're not static. By the way, we add items to this or remove items as technology progresses and as the home building process changes. So, they're not static. They change over time. So, based on all of that data, we produce something called The Most Wanted List. And The Most Wanted List are the features out of those 200 plus that are rated essential or desirable by at least 80 percent of buyers. So, we call this the most wanted features. We also describe them as being the features that would most positively influence buyers to purchase them.

And so, when [00:19:00] you have over 80 percent of buyers saying that a feature does that to them, then that's something that builders and manufacturers and architects need to pay attention to. Right? So, at the top of this Most Wanted List, we have the laundry room. Eighty-six percent of buyers said I want to have a laundry room in my house. There's no why there, but as a mom, I think it's because we don't want to see that laundry, that dirty laundry until we have time to get to it. And so behind the door, thank you very much until I can get to it.

Also, on that Most Wanted List after a laundry room, there are four features outdoors. Living outdoors is hugely important to homebuyers. We have landscaping on that list, a patio is on that list. Front porch and exterior lighting all make that Most Wanted List. There are two in the kitchen. They are a walk-in pantry and table space for eating right in the kitchen.

There's two related to saving energy, energy star windows and appliances, and also storage in the garage [00:20:00] for all the stuff that we own. Hardwood throughout the main level of the home and a full bathroom on the main level. Those are your most wanted features among all 200 plus that we included in the survey.

Greg Bray: That's really interesting, especially the outdoor ones because you don't always think about that as being kind of the builder's job. Sometimes those come after, as add-ons and things there. So you can make a difference, for sure, paying attention. That's fascinating how many different ones you asked about. Some of those probably aren't that hard for a builder to kind of tweak what they're doing to integrate and really make a difference in how they connect with those buyers.

Rose Quint: I present this data with an architect at the International Builder Show every year, and when we touch on this topic, he usually says, look, it doesn't take a whole lot of money to do something to the outdoors. Even if you're at the entry-level product, because, of course, if you're doing high-end homes, it's easy. Right? But if you're at the entry-level home, a little bit of concrete and some lights will give them the idea that there's future [00:21:00] to that yard that they can expand on later.

Greg Bray: So, as you talk about the things that people want in the home, you also talk about some things that they're willing to give up, some of the compromises that they're willing to make. What are some of the key compromises that buyers were willing to trade for as part of their buying process?

Rose Quint: So, I don't know about you guys, but I think most buyers have to make compromises, right? Not everybody can have everything they want in a home, and so we asked. We asked, how would you compromise in order to reach the dream of homeownership? The single most likely compromise you're going to want to make is a smaller piece of land. To Kevin's point, a smaller piece of land is the number one compromise you're going to take.

That highlights to me the importance of reforming zoning laws that mandate very large lots in communities. Because those zoning laws basically negate the possibility for this 39 percent, 40 percent of buyers who are willing to trade off land for the [00:22:00] possibility of owning a home. It writes them out of the picture because of, you know, the mandates to do very large lots.

So, that's the top one, but also buyers are willing to move farther away from the urban core. They're also willing to give up those exterior features. They will do the deck the patio later. And then number 4, they're willing to take a smaller house if that's what it takes to make the math work. They will take a smaller house.

We wanted the research to be as dynamic, as active, as useful as possible. So, we asked that group of people, okay, so you're willing to take a smaller house, where exactly should builders cut back? Because something's got to go If we're going to make the whole footprint go down. And so they sent a very clear message to builders and architects. You can lose real estate in the dining room and in the home office, but do not, by all means, do not touch the kitchen and do not touch the closet space.

Greg Bray: I can have a small room but I want a big closet in it.

Kevin Weitzel: You just described my perfect bedroom. When I travel, I go to a [00:23:00] hotel, I don't care about all the amenities and everything else. Think about it, when you go to IBS. When you go to IBS, you go back to your room, you crash, you literally just go there and you pass out and you wait for the next day to start the next day and walk 5 billion miles. At home, I'm in the same condition. I want my clothes to be nice and organized and well spread out. If you've got enough room for my bed to fit in a room, I'm a happy camper.

Rose Quint: We're building the right house for you, Kevin.

Kevin Weitzel: I think we are. You're starting to sing, sing some melodies that I'm loving hearing.

Greg Bray: And those of you listening who are selling that house, give Kevin a call. Right. He might be ready.

Kevin Weitzel: That's right.

Greg Bray: He might be ready. Well, Rose, we've talked a lot about the house, but let's just take one quick minute here and talk about the community as a whole. What are some of the insights that you learned about what people are looking for beyond just the home in the neighborhood around it?

Rose Quint: That's a great question, Greg. It's a great question because we have to remember that the home that successfully appeals to buyers doesn't live in a vacuum, right? It sits inside a community that buyers look at, [00:24:00] examine and evaluate as thoroughly as they examine the home itself.

And so, our research shows that the ideal community for buyers shows three main attributes. It offers convenience, it offers walkability, and it's basically a suburban feel. And we know that based on the community features that were included in that giant list described a minute ago. The top 5 most wanted in communities are being close to retail space. So, having that pharmacy, that supermarket nearby. Having a park green area in the vicinity nearby. Having walking or jogging trails in the community, being a walkable community, which we defined as one with pathways connecting the homes to that transportation, to that public space, to that retail space. And then finally, a suburban feel. Those are the 5 most wanted community features among our buyers.

Greg Bray: No, it's interesting that people want to [00:25:00] be out and just walking or biking as opposed to having to get in the car.

Rose Quint: That's definitely a change from the 80s and 90s. That's definitely a change. Absolutely.

Kevin Weitzel: So, they want that urban connection, but they want it to feel like suburbia.

Rose Quint: Right. So, they want this suburban feel. And by that, they mean, mostly single-family detached homes, back to that original statement from a few minutes ago. They want to have that walkability. They want to be able to not be too far from the office. This is in a different part of this survey we haven't covered. They would be okay commuting 11 miles one way, by the way. So, removed, but not too far.

Greg Bray: Well, Rose, this has been really interesting. And again, we've just barely scratched the surface on some of this. But if you were a builder and you're looking at all the data because you've studied it intensely, is there one or two things that you would tell builders, Hey, you need to pay attention to this and start doing something differently based on what you are seeing builders doing and what we're learning about the [00:26:00] buyers?

Kevin Weitzel: And can you expand that to, uh, start doing and a stop doing? I would love to hear a stop doing as well if you could add that in.

Rose Quint: Well, I will tell you what has gained the most popularity in the last decade, which makes them to me logical things to add to a home if they aren't already doing it. When we study, as I said, over two decades, what people want the features that have gained the most popularity in the last few years are all related to technology. And I don't think this will be a surprise to anyone.

If you look at the top 10 features with the most growth, they all relate to buyers wanting technology to do two things for them. They want technology to increase the safety of their home, and they want technology to help them save energy by better controlling the temperature inside those homes.

And so, in terms of specific features, to buyers those things mean things like security cameras, home security systems, an energy management system, multi [00:27:00] zone HVAC systems. Those are things that buyers more and more over time have come to appreciate.

In terms of what to stop doing, I have to get back to you on that, Kevin. I haven't had that question before. Remember the survey also said, what do you not want? That list includes things like an elevator and glass walls. So, these are things that don't run very high with homebuyers. Or to two-story foyers or two-story spaces. Because remember, those are very hard to keep cool and to control the temperature in those spaces. So, there are lots of features that buyers do not want. So, those are the things to stop doing.

Greg Bray: Well, Rose, if somebody is trying to get a copy of the full report, how do they go about getting their hands on all this data?

Rose Quint: Oh, yes. So the report is called What Home Buyers Really Want 2024 Edition. It is available on our store called builderbooks.com and it is available as an ebook or as a print copy.

Greg Bray: All right, [00:28:00] builderbooks.com is the place to get that. Do you have any last thoughts, Rose, or pieces of advice that you wanted to share today before we wrap up?

Rose Quint: I guess I would say, if you are one of those people that wants to be in the know of what's happening, not just in the housing industry, but in the macro economy as it relates to housing, you need to subscribe to our blog. The Econ team at NAHB produces a daily blog, sometimes two or three pieces a day on everything related to GDP, inflation, housing starts, sales, our research, our surveys. They're quick. They're short. They have fun charts and graphs. You will be in the know, eyeonhousing.org, E Y E onhousing. org. And it's free.

Greg Bray: It's free. Awesome. Even better. Even better. Thank you for sharing with us today. And thank you to the team at NAHB for all this work, because it would be very difficult for a builder to figure this out all by themselves and to track this down. So, we appreciate the work you guys do there. If somebody wants to reach out and [00:29:00] connect with you, if they've got a few more questions, what's the best way for them to get in touch?

Rose Quint: Yes. Email works best. Every day, rquint@nahb.org.

Greg Bray: All right. Well, thanks again, Rose. And thank you everybody for listening today to The Home Builder Digital Marketing Podcast. I'm Greg Bray with Blue Tangerine.

Kevin Weitzel: And I'm Kevin Weitzel with OutHouse. Thank you.