As the housing market continues to evolve and adapt to changing consumer demands, Zillow has released its 2023 New Construction Consumer Housing Trends Report. The report delves into the latest trends and insights shaping the new construction homebuyer industry, providing valuable information for builders, developers, and real estate professionals. Here are some of the key takeaways from the report.
Location & Customization
When it comes to the appeal of new construction homes, two key factors are at the forefront of the discussion: location and customization.
Making It Their Own
Buyers’ desire to customize their homes is one reason new construction homes continue to compete well against existing homes. In fact, this desire has increased in 2022, with 35% of new construction buyers stating that they intended from the start of their search to buy a home they could customize during construction. This is up from 25% in 2021.
While 44% of buyers planned to buy a completed home, 21% sought out a home
that was already under construction and that they could customize. This growing enthusiasm for customization is a major trend among new construction buyers this year.
“In 2022, new construction buyers were really attracted to the opportunity to customize their homes throughout the construction process, rather than looking for a completed home to move into right away, which was more common in 2021,” said Jeff Tucker, senior economist with Zillow.
To leverage this trend, it is important to communicate the possibilities of customization during the sales process. This approach can empower buyers to have a greater say in their purchase, potentially leading to more commitments.
Location, Location, Location
Over the last three years, there has been a growing acceptance among buyers of the idea of new construction homes in older developments. An increasing number of new construction buyers are opting to purchase homes in existing communities rather than in all-new communities or subdivisions. In 2022, only 67% of buyers chose the latter option, a decrease from 70% in 2021 and 77% in 2020.
Producing homes within these established neighborhoods is a potentially advantageous option to consider alongside all-new communities.
Digital
Digital tools play a crucial role as they enable buyers to visualize homes that are still under construction. In 2022, new construction buyers were more open and eager than existing-home buyers to embrace 3D virtual tours, virtual floor plans, and other digital tools.
Streamline the Buying Process
According to Tucker, “Compared with existing-home buyers, new construction buyers are more interested in digital tools, across the board, to understand and shop for homes.”
This presents an opportunity for builders to focus on the digital tools that their buyers prefer to use. These digital tools have become so advanced that 43% of new construction buyers reported feeling at least somewhat confident making an offer to buy a home without physically touring it if they could view a virtual tour.
Even so, buyers of both new construction and existing homes still prefer in-person tours to 3D tours when making their final decision.
“New construction buyers were more likely than existing-home buyers to agree that dynamic floor plans were helpful when searching for a home,” Tucker said. “But that didn’t come at the expense of in-person tours. Over three-quarters of new construction buyers agreed that the only way to really understand the layout of a home was to see it in person.”
Enhance the In-Person Experience
Digital tools not only aid in the research process but also complement in-person activities that buyers have with builders and agents. In 2022, 68% of new construction buyers preferred to schedule in-person tours online, a trend that has been increasing over time from 66% in 2021 and 59% in 2020. Interestingly, only 58% of existing-home buyers in 2022 preferred to schedule in-person tours online.
Builders can take advantage of these digital tools to streamline traditional face-to-face interactions and provide buyers with convenience and flexibility in shopping.
Homebuyer Wish List
New construction buyers often have clear preferences for their new homes. As many of these buyers aim to customize their homes from the ground up, their wish lists of must-have amenities are expanding.
Community Focus
The importance of community has significantly increased among new construction buyers this year, with 53% of them prioritizing it, marking a 15 percentage point rise from 2019. This can be attributed to the rising demand for shared amenities like gyms and clubhouses, which have become popular since the pandemic. Additionally, buyers are placing more value on proximity to family and friends.
While remote work has people spending more time at home, this trend underscores the fact that shared perks and social connections are still crucial for many buyers.
Energy Benefits
The disparity in preferences between new construction buyers and existing-home buyers is most evident in their energy related priorities. Energy-efficient homes not only save money but may also increase property values. This may explain why 77% of new construction buyers deem it extremely important, while only 56% of existing-home buyers share the same view.
Smart House
New construction buyers are increasingly interested in smart home features that offer control over lighting, locks, heating, and other components. In 2022, 61% of new construction buyers rated smart home capabilities as highly important, compared to only 29% of existing-home buyers who considered it critical to their move. Over the past few years, the importance of smart home capabilities in new construction has been rising steadily, from 34% in 2019 to 45% in 2020 and 58% in 2021.
Overall, the report highlights the distinctive advantages of new construction projects and assesses the impact of emerging technology on the way buyers search for new homes. Buyers have evolved in the last year, and builders can leverage data-driven insights to plan for the future – in 2023 and beyond.
