Housing consultant shares insights on "new faces" of home shoppers
Understanding what people want when planning to buy a home - and what they'll pay for - can yield a better approach to housing, according to a national housing consultant. Such knowledge will also enable builders and Realtors to better anticipate and meet their clients' needs said Mollie Carmichael, guest speaker at the annual "Builder & Developer Breakfast" hosted by John L. Scott Real Estate.
Carmichael, a principal at John Burns Real Estate Consulting, told her audience the insights she gained while working with developers and builders, coupled with her quest to understand Wall Street have served her well in her current role as a consultant at Burns, a housing market research and consulting company that reports on 70 MSAs (Metropolitan Statistical Areas) every month.
In her remarks last month, Carmichael said the firm's goal is to understand multiple facets of today's shoppers, including Who? How many? Where? What? Why? and When? Applying information about market trends, as well as shoppers' demographics and lifestyles can help developers and builders make astute decisions about their product offerings.
Titled "The New Faces of Residential Opportunity," the speaker's presentation focused on demographic shifts, generational segments, and consumer and product solutions.
Thinking only about four commonly identified generations (GenY, Gen X, Boomers and the Silent Generation) is "the easy discussion," Carmichael said. Only one percent of people looking to buy is under age 25, so the focus should be on those aged 26 and older. It's also important to recognize differences within the generations, she advised.
Research by John Burns Real Estate indicates four major influencers can sway shoppers. These include lifestage, economic, societal and technology/innovation. Recognizing this, the firm believes a better approach to housing strategies is to further segment by decades.
Carmichael identified seven groups or lifestages, the characteristics for each (accompanied by an iconic person), and the implications for housing. In brief, they included:
|Decade||Formative Years/ Societal Influence||Characteristics (partial)||Housing Implication|
|1940s Achievers |
(27 million, aged 67-76)
icon: Dolly Parton
|Raised in the new suburbia. Freeways are born.||Paved the way for equality. Double income families; Divorce rate spikes.|
"Traditional, thriving, triumphant"
|#5 Opportunity (tied)|
#2 Net worth
Prefers communicating via phone.
Will drive for SFD.
|1950s Innovators |
(40 million, aged 57-66)
icon: Steve Jobs
|Doing things different (unconventional decor, unique schemes).|
First to begin challenging government, authority.
Split families grow.
|Rock star rebels.|
Influenced by fantasy shows.
The Pill changed household formation.
Innovators lead a treasured life.
More entrepreneurial growth.
"Innovative, unique, different."
#1 Net worth (but less savings or pension)
70% still work. Email, phone preferred communication mode.
Lifestyle and location first. Tend to be tied to current home, but may opt for a 3-story townhome with elevator. They think 20 years younger.
|1960s Equalers |
(43 million, aged 47-56)
icon: Michelle Obama
|Hard rock, disco bands, female power, non-conformists. |
Families are redefined.
Latch key kids, blended families.
PCs enter workplace.
More stay at home dads.
#3 Net worth
Mature couple or mature family.
Prefers email or text.
(41 million, aged 37-46; 23% foreign-born)
icon: Jennifer Aniston
|Nontraditional families influence formative years.|
Many Balancers were raised in McMansions.
|Seek work-life balance.|
First generation to be fully immersed in technology.
9/11 changes everything. Family continues to be redefined.
|#1 Opportunity (tied)|
#5 Net worth.
Children before marriage.
Family size begins to rise.
"Value design and size" for frugal growing family.
Prefer text or social media
(44 million, aged 27-36; 41% single moms)
icon: Mark Zuckerberg
|Motivated by "tribe and travel."|
Grew up during "great recession."
|Sharing economy begins to change everything (including housing choices).|
Highly educated with high student debt.
#6 Net worth
Luxury is out, thrifty is in.
Prefers experiences over stuff.
Homeownership is 28-30+
|1990s Connectors |
(44 million, aged 17-26)
icon: Selena Gomez
#7 Net worth
Renters for now
Innovators are the #1 new home shopper in the U.S. overall, followed by Balancers and Equalers. In Seattle, Balancers are #1 home shoppers, followed by Innovators and Sharers, according to findings from the latest Consumer and Product Insights survey by Burns. The research was conducted to uncover what is motivating consumers today, and to identify retirement trends.
Carmichael reported lifestage is very distinct between generational segments. Two groups - mature couples and young families - are the top lifestage looking for a home today.
Of those surveyed, 76 percent think today is a good time to buy, despite clearly identified obstacles. Leading the list of obstacles is the inability to find what they want. Half of today's consumers who are looking for a home cited this problem, with Balancers reportedly the most challenged.
Design matters, Carmichael reminded the audience. Home design ranks #2 across all generational segments as a motivation to move. To underscore the point, she said a vast majority (88 percent) will take a smaller backyard if designed well for entertainment and privacy (80 percent want privacy outdoors). Also critical is natural light (more than 70 percent said they would pay another $4,500 for a "wide wall" of glass).
"Emotion sells," the housing consultant stated. People may set out to "just look," she acknowledged, "but good design pulls them over the finish line."
Along with location and interior home design, affordable price is a key motivator for today's shoppers. (The less affluent will drive farther to get what they want.)
"Financial security is important," Carmichael said, especially among those aged 50-plus, who are the #2 Shopper prospect. Of those surveyed, 36 percent think they won't have enough money to retire.
Underscoring the importance of design, she suggested developers and builders think in terms of privacy, charm and affordability. (It was also noted that 80 percent of the world can't see 3D, so other visuals should be used to help shoppers visualize features and amenities.)
Survey participants said their five most important priorities are topped by style, then function, affordability, interior size, and exterior size.
Based on research by the Burns firm, Carmichael said demand for multi-generational housing will grow. "Younger generational segments are more likely to want to accommodate their elderly parents," she stated. More than half said they may also consider accommodating their adult (aged 18+) children in their next home, she added.
Carmichael also highlighted a few findings from a comparison of the generations, including:
- Balancers and Sharers are twice as likely to want Modern over Traditional.
- Innovators and Achievers are more inclined toward Traditional, but at least one of every four in this group want Modern.
- Outdoor living is about privacy first for all generational segments except Sharers.
- Pets are a priority for many of today's shoppers (more than half have pets, but only 29 percent have young children).
- Balancers and Sharers are more likely to choose transitional styles.
- Equalers, Innovators, and Achievers are more likely to choose Craftsman.
Builders also need to be mindful of shoppers' expectations on technology features. Air conditioning leads the list, followed by fans, keyless entry, smart technology, USB outlets and security with two security cameras.
Health is another priority for today's shoppers, with 65 percent saying they value being physically fit. Nearly seven of every 10 shoppers (69 percent) said they would pay $1,200 more for clean air.
"Going green" is also growing in popularity. Fifteen years ago, only three percent of shoppers said they would pay for solar panels; now half will invest in that amenity.
Topping the list, when asked what matters most, is family. A whopping 89 percent want to spend their time with family first.
Commenting on their firm's latest survey, which went to more than one million new home shoppers across the country, Carmichael said there's no reason to go beyond 3,200 square feet when building new homes today, "other than lazy design." Moreover, she said, it's not true that more square footage means more revenue. "Builders need to understand what consumers will pay for. By listening and asking crucial questions you can add significant dollars to the bottom line."