Last week’s National Association of Real Estate Editors spring conference in Houston hosted a home building panel featuring Metrostudy’s Brad Hunter, David Weekley Homes CEO John Johnson, and Trendmaker Homes CEO Will Holder. While the panel was supposed to discuss the “boom” in homebuilding, the end result was a dissection of what fuels (or what’s not fueling, to be more precise) home building in America, and the takeaway was what trends and features consumers expect from home builders in the 21st century.
“Housing starts are down because land is not available where builders want to build,” said Hunter. It’s true, especially considering how many developers are moving away from golf course communities and, in some cases, plowing those fixtures over to build more homes. As for amenities to replace the lost open space, builders are installing easy-to-maintain hike and bike trails, which are more family friendly attractions.
Another phenomenon that Hunter touched on is the missing entry-level new home buyer. “All the distress is pretty gone from the market,” he said. “What we have is a weak job market.”
“People still want to buy homes, no doubt about it,” Holder added, saying that demand is there but because of the downturn and how many builders tanked when the recession hit, it’s hard to convince lenders to release the capital. It’s a market correction that has been slow to come around.
“It’s hard to turn the Titanic when you’re headed for an iceberg,” Hunter said, noting that there was already a glut of spec homes in communities set to come online when the bubble burst. Banks are wary of making such a costly mistake again. “Development continued for three years after the bust. It’s hard to get going again.”
So what do potential new homebuyers want?
That’s a mixed bag considering who is buying. The Hispanic homebuyer is a big force in 2014, demanding a home that can accommodate a multi-generational family. Think: two master suites on the first floor, multi-functional kitchen and family areas, eschewing formal rooms.
“Buyers want small homes full of big rooms,” said Holder said. They also want bathrooms with more function and less luxury, leaving the bathtub in the dust.
Many in the audience, myself included, let out an audible groan. Where will they drink their wine? I thought quietly.
Media rooms are out, too, as homes need spaces that can serve more than one purpose. And every home will be a “green” home, Johnson said, because buyers want a home that won’t have a pricey power bill.
Of course, affordability is a big problem, with many new home models costing in the $500,000 range because builders know they can move it in this market. Still, some builders such as DR Horton and Express Homes are targeting the first-time homebuyer, just in a more subtle way.
But, until jobs and financing fall in lockstep, the recovery will be delayed.