Changing Consumer Preferences and How to Keep Up
We live in a time when technology moves fast, and consumer preferences move faster. With changing market trends and consumer interests constantly fluctuating, homebuilders must remain current in order to best serve homebuyers needs. Due to COVID-19 transforming the way we work, socialize and ultimately live, homebuyer’s needs are also changing in order to adapt to this “new normal” we now find ourselves in.
As we are spending an average of 9 hours more per day at home, people are re-thinking the role of a home. In a recent study from the National Association of Realtors, 13% of homebuyers have changed at least one home feature that’s important to them due to COVID-19. As Zoom meetings are adjusting people’s expectations for privacy, backyards and parks are more desirable, and home offices are high in demand, homebuyers’ needs are changing more drastically than ever before. In this article, we outline the latest homebuying trends and some strategies on how homebuilders can stay ahead of these fickle consumer preferences.
LOCATION - SUBURBS OVER CITIES
In the debate between urban vs. suburban the majority of millennials would favor the high-rise rentals over the home with a yard. However due to COVID-19, this demographic is retreating from the downtown cores of their cities and relocating to the suburbs. Millennials have become the largest cohort of buyers, and this new preference for suburban living presents itself as a huge opportunity for homebuilders. As people are fleeing large expensive cities, there has been a 13% jump in home searches in suburban zip codes according to realtor.com. With the government mandates to stay indoors, the downtown amenities and a central location are less desirable for homebuyers. This trend will likely last into the foreseeable future, as 40% of city dwellers claimed they were “very” or “somewhat likely” to move further out when the pandemic ends.
TIMELINE - BUYING HOMES SOONER
Although this pandemic has brought on financial uncertainty for many consumers, homebuyers are moving towards purchasing sooner. Lower mortgage rates and spending more time at home are two significant driving forces of this change. These low rates have fueled a sharp and fast recovery in the housing market, especially for homebuilders. Lower mortgage rates are making homes slightly more affordable, however mortgage credit availability is the lowest it has been in nearly 6 years. Despite some of the remaining challenges in purchasing a home during the pandemic, the sentiment remains as 41% of those surveyed by realtor.com mentioned they would be looking to buy sooner than initially planned. This unusual and unforeseen change in buying behavior shows the volatility in consumer preferences. Due to the current economic uncertainty and social unrest, homebuilders need to stay up to date with real-time data to adapt to changing needs in the market, to accurately match buyers with the right home.
SIZE - NEED FOR MORE SPACE
As the pandemic has multiplied the amount of time spent at home, shoppers are feeling more cramped in their current quarters than ever before. Prior to COVID-19, there was a growing interest in downsizing, as many Americans were moving from large suburban houses to smaller urban neighborhoods. However, home shoppers are realizing the need for space as countless organizations are allowing employees to work from home indefinitely. As the home is now doubling as home offices, schools, daycares and gyms, buyers are needing more room to accommodate everyone in the household. Based on the National Association of Realtors it is believed that buyers are going to want an additional 500 to 1,000 square feet on top of the average 2,060 square feet home. Homebuilders have the opportunity to leverage this growing trend by including more rooms with privacy and designated office spaces in a variety of floorplans.
FEATURES - HIGHER EXPECTATIONS FOR AMENITIES
Spending more time at home with the limited ability to travel for the foreseeable future means homebuyers need to find spaces for relaxation, fun and exercise-- all in the comfort of their own home. Rather than question the necessity of these features, buyers will consider them a requirement. The demand for amenities like spacious outdoor living areas that include luxurious patios and pools will be sought after; even cold-climate locations may see a resurgence in these features. As we continue to spend more time at home, it is safe to say that everyone is enjoying indulging and experimenting with food more than ever before. Luxury kitchens will likely be on the top of homebuyers lists as 56% of survey respondents were cooking more during a pandemic and 36% were expecting to cook more after the pandemic. To counteract the indulgence in food, there has been an acceleration in interest for home gyms. A recent study via the National Association of Homebuilders found that nearly 30% of those surveyed wouldn’t feel comfortable going to the gym for more than 6 months. Builders need to remain on top of changing consumer preferences to fulfill the needs of each of their customers and feature the most desired amenities per each unique buyer.
PRICE - HIGHER PRICED HOMES
COVID-19 has also had a notable impact on home shoppers pricing decisions. The low mortgage rates and a desire for larger homes have spurred a shift towards higher priced properties. 38% of survey respondents via realtor.com claimed they were looking for higher priced homes than initially anticipated. The desire for more room and better neighborhoods is pushing homebuyers into the suburbs over its urban counterpart. The need for new and improved home amenities also factors into this growing trend of purchasing homes at a higher price point. Homebuilders have the opportunity to leverage home shoppers price flexibility by investing in more luxurious home designs and investigating land development in sought after neighborhoods. As we continue to rethink the role of a home, many buyers are more comfortable with purchasing a home at a higher price point, simply because we are spending exponentially more time inside. With rising unemployment and economic uncertainty, it may be surprising that more homebuyers are looking to spend more on a home; for this reason, homebuilders must leverage their own data to better understand rapidly changing consumer preferences.
Given the current market due to COVID-19, consumer interests and behaviors are difficult to predict. Marketers can no longer hope that educated guesses and the same old methods will work forever. Homebuyer’s needs are changing more rapidly than ever before, and it is time for homebuilders to capitalize on the available technology and behavioral data to better understand consumers needs and preferences. OpenHouse.ai offers an AI-powered marketing platform that is customized for homebuilders to empower decision making with real-time data.
- The OpenHouse.ai Team