What Buyers Want in a Small Home

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If you’re building a home with less than 1,600 square feet in living space, what do your customers want? The short answer is energy efficiency, a laundry room, ceiling fans and exterior lighting, according to a recent NAHB study.

The study is based on the latest home buyer preference survey conducted by NAHB, using a consumer panel maintained by Home Innovation Research Labs The survey collected information from 4,326 recent and prospective home buyers, 1,043 of whom either recently bought or plan to buy a home with less than 1,600 square feet of living space.

Among other things, the survey asked them to rate approximately 150 home features on a four-tier scale:

  • Do not want (not likely to buy a home with this feature)
  • Indifferent (wouldn’t influence decision)
  • Desirable (would be seriously influenced to purchase a home with this feature)
  • Essential/must have (unlikely to purchase a home without this feature)

 

Figure 1 shows the top 10 features, based on the share of buyers who rate them essential or desirable. A laundry room, ceiling fan, exterior lighting and ENERGY STAR® ratings rank high on the list for buyers of both small (less than 1,600 square feet) and moderate size (2,000-2,499 square feet) homes. The main difference is that small home buyers are less interested in a patio, walk-in pantry and garage storage. Buyers of moderate sized homes are just as likely to want a full bath on the main level, above-code insulation and a living room, but because they are even more interested in other things, these features don’t crack their top 10.

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As you’d expect, buyers of larger homes tend to insist on more features in their homes. Figure 2 shows the kitchen features that are rated essential by at least a third of large (3,000-plus square feet) home buyers, and where the spread between large and small home buyers is greater than 2 to 1. These are items a builder may be able to forego in a small home to save costs, but not in a larger one.

Nix the wine coolers

In addition to items that a builder may be able to forego, there are some that he or she should avoid in a small home. Large percentages of small home buyers say they are unlikely to buy a home if its kitchen contains a wine cooler (51 percent), double island (39 percent), warming drawer (32 percent), and sensor-operated faucets (30 percent). Buyers of larger homes show considerably less resistance to these items.

More than a third of small-home buyers also “do not want” a laminate kitchen countertop, but it’s well understood that laminate falls toward the low end of the desirability scale and tends to be used only when affordability is an overriding concern. This seems to be the case fairly often, however, as a recent NAHB post has shown that laminate remains the second most common kitchen countertop material in new homes (although it trails granite by a wide margin).

Smaller incomes drive interest in energy efficiency

NAHB’s survey also found that buyers of small homes tend to have modest incomes (median of $47,000, compared to $67,000 for all home buyers). Consistent with their limited incomes, 60 percent of small home buyers want to buy an existing, rather than new, home (compared to 44 percent of home buyers overall), and 55 percent want to buy a home priced less than $150,000 (versus 31 percent of buyers overall). As described in a 2016 post, construction costs make it difficult to impossible to build new homes that sell for less than $150,000.

Modest income is also consistent with the desire for energy efficiency evident in Figure 1, assuming the desire is motivated primarily by an attempt to reduce ongoing utility costs. In theory, energy efficiency could also be motivated by a desire to reduce the home’s environmental impacts. However, the NAHB survey found that only 9 percent of small home buyers are willing to pay more for a home out of pure concern for the environment (compared to 14 percent of buyers overall).

In addition to reduced square footage, buyers of small homes are more willing than others to accept smaller lots and fewer amenities to make a home more affordable. They are not, however, more willing to compromise on finishing all the spaces, quality of materials, or commuting distances (Figure 3).

In terms of floor plans, as you would expect, buyers of small homes strongly favor single-story homes. Like other buyers, they also tend to favor open or partially open layouts, with no or partial separations between the living spaces. In fact, buyers of small homes are more likely to favor a completely open design that combines a dining area and living area into the same room. They are also more likely to say they don’t want both a dining and living area in their homes. Buyers of larger homes, in contrast, are more likely to prefer dining and living areas as distinct, separate rooms, sometimes in different parts of the house (Figure 4).

These are a few examples of what small home buyers want in their homes in addition to a reduced amount of square footage. Considerably more detail can be found in “Home Buyer Preferences” available from BuilderBooks.com, which breaks down the answers to every question on the 13-page survey according to the size of home the buyer wants to purchase.

Original article, written by Paul Emrath, Ph.D., was published in the Winter 2017 issue of Best in American Living.

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