By Andrew Leff, National Builder Executive for Bank of America
Times change … and so do the attitudes, behaviors and preferences of homebuyers.
In the inaugural Bank of America Homebuyer Insights Report,* we looked at today’s consumers and their views on homeownership. The report’s findings are quite revealing, and especially pertinent to the home building industry.
Modern homebuyers want to skip the starter home
The report revealed that 75 percent of first-time buyers would prefer to bypass the starter home and purchase a house that will meet their future needs. Thirty-five percent even plan to retire in this first home.
With this long-term view on homeownership, it’s not surprising that 69 percent of first-time buyers want to save more money now and wait to move into a nicer home in the future.
This complements the experience of many in the building industries who have embraced the trend towards building higher-end homes. Starter and trade-up home inventory, which has been constrained in recent years, may comprise a smaller portion of the overall inventory for many, many years to come.
What buyers want in a home: Four factors buyers put above all else
When evaluating a prospective home, today’s buyers consider these four factors above everything else: cost (82 percent), neighborhood (71 percent), floor plan (60 percent) and square footage (47 percent).
First-time buyers are not eager to compromise. The report showed only 17 percent of first-time homebuyers said they’d sacrifice location, and 36 percent said they’d sacrifice features in their dream home.
Half of the surveyed “someday” first-time buyers said they are waiting until they can save more money to buy their desired home or find one in the neighborhood they want. Forty-seven percent are waiting because they do not think they can currently afford a home or the type of home they would like to buy.
Again, these results strongly suggest that buyers would rather delay purchasing a home in order to get the home they want; lowering their expectations for the home of their dreams is not on their agenda.
Millennials are also focused on the long term
Millennials, like previous generations, see homeownership as a top priority alongside saving for retirement. This is great news, as it contradicts speculation that Millennials didn't even see homeownership as a goal.
Thirty-one percent of first-time millennial buyers expect financial support from their parents or partner’s parents in buying their first home, including help with the down payment (19 percent) or monthly mortgage payments (15 percent). This is a big generational difference. Historically, homebuyers have not outwardly expressed an expected monetary contribution from their parents.
Professional remodelers take note: Millennials also list remodeling as a place they expect parental support.
More key findings, including details about emotional and financial factors that drive modern homebuyers, are available in the recently issued Bank of America Homebuyer Insights Report.
*The 2016 Bank of America Homebuyer Insights Report’s findings are based on a national survey of more than 1,000 adults 18+ who want to buy a home in the future, and particular focus was given to the preferences of first-time and millennial buyers (defined as those between ages 18 and 34).