The Top 5 Real Estate Trends: What You Should Look for When Buying a Home
We surveyed 2,000 recent home buyers and 500 real estate professionals to see what's taking flight in today's home search. The learnings may surprise you.
We were curious: What are millennials looking for in their first home? What do repeat buyers want? What trends have changed and which ones haven't? For our first Home Buyer Study, we tapped into thousands of recent buyers and real estate agents within our Better Homes and Gardens Real Estate network, to find out. Here's how the wish lists of next-gen buyers can influence the hunt for your next nest and the sale of your current one.
1. Millennials purchase with a plan to stay.
About a third of survey respondents buying their first home (36%) picture themselves staying for more than 10 years. Does this signal a new view of the so-called starter home—the first house that people buy (and keep only a few years) to launch their homeownership? In some ways, yes. Typical starter-home buyers are now investing in higher-end homes, and 42% of millennials (those born between 1981 and 1996) surveyed wanted their first home to be their dream home. They want features traditionally associated with move-up buyers, such as good school districts and more square footage, says Annette Cicinelli of Better Homes and Gardens Rand Realty in Westchester County, New York. "Move-up buyers now compete with first-time buyers," she says. "And I'm seeing empty nesters looking into those smaller starter homes."
2. The home-buying process takes longer than it used to.
First-time buyers say they spent an average of five months from research to closing; repeat buyers did it in four. Compare that to a 2012 National Association of Realtors report that found the process took first-time buyers only three months and repeat buyers two-and-a-half months.
One possible reason for the longer hunt is the array of online property search sites. Agents say most clients use the websites to house hunt, which increases options but also expands the search time. According to our survey, home buyers visited an average of nine houses during their search. In addition, 63% of all buyers report going online to educate themselves: reading articles, researching builders, signing up for newsletters, checking classified ads, reading blogs, and listening to podcasts. One-fourth of buyers reported also getting information from social media, such as Pinterest and Instagram.
Another factor that can stretch the time frame is the loan process. That's why agents consistently recommend getting preapproved. One proactive approach on the rise is "people selling their current home and then renting or moving in with family so they can be as nimble as possible when the home they want comes on the market," says Shannon Stumpenhaus of Better Homes and Gardens Real Estate Kansas City Homes in Kansas City, Missouri.
3. Buyers are looking for move-in-ready homes.
Buyers used to seek out fixer-uppers. Outdated kitchens and baths, unnecessary interior walls, old carpet that might be covering salvageable flooring—all were high on the wish list, say, 10 years ago. People could usually get homes with those problems at affordable prices then eagerly update and personalize them.
Now more buyers want homes that don't require a lot of work. In fact, our survey found that 52% valued purchasing either a newly built home or one that didn't require any renovations or repairs before moving in. No doubt it's an issue of not wanting to spend time and money, with 35% of survey respondents concerned about budgeting for renovations. "People are more willing to do cosmetic upgrades, but they don't want to deal with expensive and extensive work," Stumpenhaus says. On the no-thanks list: replacing the roof or heating/cooling system, making structural changes, repairing drywall, and dealing with mold or termites. Major renovation challenges include finding the right professionals and knowing which renovations will increase resale value.
Even if they don't want to take on big-ticket repairs, there is almost no escaping some jobs. Eighty-five percent of buyers ended up in homes that needed at least some work. Agents say projects like painting, replacing or refinishing flooring, and swapping out appliances shouldn't scare off buyers. And Stumpenhaus encourages buyers not to automatically reject a house for a bad kitchen or bathroom. "They may not have the money to do them right away, but those are things they can do later," she says.
4. The "kitchen crush" is stronger than ever.
The heart of the home still gets to the heart of us. Buyers across the board told us that the kitchen was the room that most motivated them to purchase their home.
What features do real estate agents say buyers are looking for? Islands are big, in more ways than one—room for seating, please. High-end appliances are in demand, as are specialty options, such as a wine refrigerator or built-in coffeemaker, and extra function. "People are asking for double ovens so they an easily entertain," says Kerri O'Hara of Better Homes and Gardens Real Estate 43 degrees North in Boise, Idaho. Top-of-the-line kitchens include custom cabinetry, WiFi-enabled appliances, and an open floor plan with spots for specific tasks. "I'm starting to see 'protein stations'—prep areas equipped with a blender and a small fridge for making smoothies and other healthy snacks," says Jessica Duncan of Better Homes and Gardens Real Estate Main Street Properties in Pensacola, Florida. The average cost to remodel a kitchen that's 150–350 square feet is $48,000, according to the National Kitchen & Bath Association.
The kitchen not only influenced our respondents' recent purchases but also was top of mind when they described the home of their dreams. The majority (66%) selected a state-of-the-art kitchen as their most desired luxury. Not even an outdoor pool or a theater room beat out the ideal kitchen.
5. The biggest factor for millennial buyers: It's a good investment.
When naming the factors involved in their purchase, repeat buyers focused on features (size and style, for example); millennial buyers said homeownership was a step toward financial stability and adulthood. About 65% of millennial buyers say they think it's a good investment, along with a part of being an adult (40%), a way to put down roots in the community (40%), and a sign of being successful (31%).
To maximize the investment, agents recommend buyers picture themselves as eventual sellers. They should consider: Is this a growing, active area? (It should be.) Is it the most expensive home in the neighborhood? (It shouldn't be.) "People need to look at homes that are a good investment in case they need to sell," Duncan says. "You never know what life changes are around the next corner that will necessitate a move."