Home Buyer Wants vs. Needs

Trus Joist, now part of Weyerhaeuser’s forest and engineered wood products global empire, gave birth to I-joists in 1969, the same year Apollo 11 astronauts took “one giant step for mankind.” Also that year, Summer of Love droves celebrated peace writ large at Woodstock on the muddy cow pastures of Max Yasgur’s farm in Bethel, N.Y.

It’s fitting, then, that most of the design and engineering trends housing and consumer experts could point to as driving what we call the “A-lot recovery of 2013-14” should sit on top of a construction innovation that came into being as the Summer of Love generation came of age.

Hold the spotlight on the I-joist for a moment, and it’s helpful to look at some of production home building’s key 2014 design trends across a span of three connected but different vantage points. One, perhaps most important, is demographic. Almost equally meaningful is socioeconomic, and the third is scientific. From within these three broad frames of reference, we can detect the way design trends that currently define the housing cycle’s early recovery likely will evolve into or impact ones that we’ll be talking about for years to come.

Nick Lehnert, executive director at Irvine, Calif.–based KTGY, and Mollie Carmichael, principal at John Burns Real Estate Consulting in Irvine, assembled for BIG BUILDER14 ethnographically informed design trends. All 14 of these trends fall within three primary assertions in today’s new-home market:

• Scale trumps size

• Livability trumps salability

• Technology can solve for both scale and livability

For starters, let’s check the demographics of new-home building and development’s post-downturn stage, the one the housing economy has been slogging through since the latter part of 2012. The NAHB divides the nation’s 118 million households into 11 Aztec pyramid–style tiers, each a layer of home-price ranges that match up to the number of households that can afford that price range but no more than the top of the range.

What the NAHB diagram drives home is that about three out of four American households cannot afford a home that exceeds a price tag of $250,000. Place that figure alongside 2014 median new-home prices in the U.S. of $275,000, and a blunt reality crystallizes. Even without tying age groupings to the NAHB price-range pyramid, it would be hard to argue that the lion’s share of households that can afford new homes in today’s market hail from anywhere other than the baby boom era.

One easily can grasp why demographics—both age and income—play a judge-and-jury role in design trends that stand out today. Baby boomers possess the discretionary wherewithal to buy a home in a financial environment that’s been impressively hostile to borrowers in general. Baby boomers—some few millions of them, anyway—have cash; they have options to move where they choose, untethered to the choppy geography of jobs; and, important in a real estate cycle, they can even be said to have time on their side.

In their mass, means, and motivations, baby boomer purchasers define—as KTGY’s Lehnert puts it—the bright line of “market acceptance” and “consumer preference” in a market that is shifting, step-by-cautious-step, from an investor-driven mentality to an owner-occupier mindset.

They also fuel the home building industry’s collective, calculated first move in recovery, which has been to answer home buyer “wants,” leaving the “needs” of would-be home buyers to a second or third phase of the healing process.

This is the way house, community, and neighborhood design that is popular in today’s marketplace tracks to socioeconomic forces. What people who can buy—i.e., largely baby boomers and a much smaller showing from other age groups—want these days differs from what those who could buy wanted earlier. Before—back in the insane housing bubble days of the past decade—selling briefly superseded the experience of living in a home.

What it comes down to now is that buyers want a place to live rather than just a place to sell for more money. Yes, homes still serve as investments, and home buyers—like any other major stakeholders—want an exit strategy. But what’s different in today’s market is that most buyers are looking at their homes’ intrinsic livability value. This choice of livability over salability means the house and its surroundings need to “live” differently. That’s accomplished not just through design but engineering.

To kick-start a housing market from its low point somewhere south of 300,000 new-home sales, it was going to take more than mere demographics and the onset of house price stability. This is where technology innovation figures as a catalyst of excitement and urgency among buyers who have the necessary resources.

I-joists were the innovation whose strength across greater spans allowed for open floor plans that are de rigueur in so many community model parks these days. Now, polymers and synthetics magically strengthen and add beauty, light, motion, and functional capability to doors and windows that accordion or disappear into walls that open up and merge indoor living areas with the outdoors. Engineering—whether it’s load-bearing walls; the aesthetics of granite countertops that now can be sliced to a sleek quarter-inch; the conduction, convection, and absorption of air molecules to make a building envelope healthy and efficient; the properties of daylighting; or the nimbleness of a floor plan to accommodate flexible uses—is what enables builders to cross the line from “market acceptance” to “consumer preference.” It’s what gives builders an opportunity to do what today’s market needed to do most, which was to cater to home buyers’ wants rather than aim at their needs.

- By John McManus. This article was originally published in BUILDER  September 2014.