Survey Finds Buyers’ Tastes Run Ahead of Reality
Having a champagne appetite and a beer income is a cliche that fits many of today’s potential home buyers, judging by survey results released at a seminar at the Disneyland Hotel.
Or, as Ron Vallandingham, director of business development for Walker & Lee/Great Western Real Estate, which co-sponsored the seminar with the Southern California Gas Co., expressed it:
“It’s realistic to have this seminar here today, because many shoppers seem to be in Fantasyland.”
Based on a survey by Santa Ana-based Walker & Lee, which announced a name change at the seminar to Great Western Real Estate, many would-be home buyers are realistic about house size. Of more than 1,200 shoppers surveyed in Los Angeles, Orange, Riverside, San Diego, San Bernardino and Ventura counties, most said that they expect a condominium to be 1,340 square feet and a single-family home to be 1,780 square feet. Five years ago, shoppers expected a new home to be about 10% larger.
Shoppers surveyed this year were unrealistic, however, when it came to what they are willing to pay for a home: up to $983 a month, although they were paying $630 on mortgage payments or $550 a month on rent. But, what they would wind up paying a month for a new home would be considerably more than $983, because the amounts they expect to put down and pay in interest are unrealistically low.
This prompted Wes Weissinger, the firm’s vice president of commercial brokerage, to say:
“The data illustrates that those surveyed can either buy a less expensive home, put more down, pay less in interest rates or win a lottery.”
Those surveyed--primarily baby boomers who are first-time or first-time move-up home shoppers--said that the most they’d be willing to pay, on the average, was $118,000 for a new single-family home and $98,500 for a condominium. Their average annual income was $43,400.
Yet, their tastes border on the extravagant. If buying a car, they’d get it loaded with options. Baby boomers want all the toys, according to the survey, and in housing, this means:
Space for a video recorder and exercise equipment, a gas barbecue, extra electrical outlets to accommodate the video recorder and computers, provisions for cable and large-screen television and phone jacks in a secondary bedroom or the garage, although they also plan to have cordless phones.
About 25% of the shoppers surveyed also said they plan to own an outdoor spa and have a home-security system within a year.
Most of the shoppers also wanted a standard two- or three-car garage with direct access to the house; two and preferably three bedrooms, including a master-bedroom suite with an oversized bathtub and a mirrored wardrobe; vaulted ceilings in the living room; a fireplace in the family room if they have a family room, wet bars, skylights, bay windows, ceramic tile counters, and wood or tile entry floors. As for the outside color of a house, they opted for tan or beige.
They can’t all afford single-family homes, but that’s what 90% of all shoppers surveyed prefer. So, the surveyors concluded, that might account for an increasing acceptance of manufactured homes.
This might also account for a preference for town houses over so-called “stacked condominiums,” one-story condos that sit on top of each other, although stacked condos with enclosed garages were preferred over town houses with carports. As one of the seminar participants observed, “Who says that the love affair with the automobile is over?”
To buy a single-family home, the shoppers were willing to commute more than half an hour to work. Three years ago, when the most recent Walker & Lee home-buyer preference seminar was held, shoppers were only willing to drive 21 minutes. This year, one of the factors least affecting the shoppers’ decision to buy was the desire to be nearer to work.
Even so, shoppers were practical when it came to listing their three most important reasons to buy. They were: (1) tax advantages; (2) investment potential, and (3) energy efficiency. In that light, they also expressed an overwhelming preference for gas in heating and cooking, and this choice was attributed to cost. Most of those surveyed are couples with two incomes.
Even with two incomes, though, the shoppers generally underestimated housing costs. So speakers urged the estimated 400 builders in the audience to bridge the gap by subsidizing closing costs or “helping to bring the mortgage rate down.” About 75% of the shoppers indicated that they plan to buy now, in contrast with 61% in a 1978 survey.
In his introductory remarks, Vallandingham reflected this, saying: “Experts agree that the boom years of 1978 and 1979 probably will not come again, but now home shoppers are eager. We have the lowest interest rate in six years, and we’re seeing an occasional camp-out (of home buyers).”
After the seminar, William O. Thagard, Great Western Real Estate (Walker & Lee) president and chairman of the board, said that since 1982, his company had not held the “Insight” seminar, now in its ninth year, “because builders had cut back--housing starts were down--and the seminar was not exactly warranted, but now they’re back in full swing.”
Nonetheless, some words of caution were voiced by builder Peter Ochs, president of the Fieldstone Co., and architect Art Danielian, president of the firm bearing his name, in a session following the survey results.
Suggested Danielian:
“We use the consumer survey very generally. When you get down to design needs, you need specific details about the site and (geographical) area.”
As Ochs put it:
“There’s a huge amount of useful information in the survey, but when you move to a specific product or land-buying decision, you must get site specifics. There may be a small market for singles, according to the survey, but it might be large in a certain area.”
They also urged builders to create small homes in planned unit developments with architectural controls that allow unit clustering, more open space and landscaping that is maintained through common ownership.
And they cautioned builders to watch out when including extra features. “If you add up all the money you can spend for additional features, you can jump the home price significantly,” Danielian explained. Added Ochs:
“The consumer will say that he wants extras, but he knows that he will have to make compromises. . . . And extras can make a difference in how many houses you sell per week.”
Earlier in the seminar, Pat Little, a senior research associate, referred to these extras, the subtitle of the session, as a tale of two real estate markets, and a book by Charles Dickens, saying:
“If Dickens were alive, he’d probably say that it was the best of times, it was the worst of times, but now there are some ‘great expectations.’ ”
MOST DESIRED FEATURES
What today’s would-be buyers want most in single-family homes.
$750 CERAMIC TILE COUNTERS 63% 500 TILE/WOOD ENTRY FLOORS 57 200 OVERSIZED BATHTUB 61 400 CERAMIC TUB/SHOWER 49 500 SINGLE OVEN + MICRO 48 300 MIRRORED WARDROBES 48
