Buying & Selling Houses

Survey Says: This Is What Today’s First-Time Home Buyers Are Looking For

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Buying your first home is an exciting, albeit stressful experience. From picking the perfect location, settling on a size, and designing to fulfill your dreams, there’s a lot that goes into finding a first—and sometimes forever—home.

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But just as the headlines suggest, this process looks very different depending on the age of the buyers. While most of the talk about millennials and real estate points fingers at the generation for "killing" the housing market (1), they’re actually just shaking it up (2). Not only are they skipping starter homes and buying their dream home once they’re financially ready, but the homes they’re after also look remarkably different from those of their predecessors (3).

Generational shifts certainly alter what the picture-perfect starter and dream home look like, but gender also plays a role in what first-time home buyers look for. A recent study by insurance expert Clovered set out to find what features and amenities mattered most to first-time home buyers and how these qualities differed across generations and genders.

Size Matters

Despite numerous headlines suggesting millennials are after modest, small homes (4), Clovered’s study found that millennials’ dream homes were larger than baby boomers and Gen X-ers—in both square footage and the number of bedrooms and bathrooms. While baby boomers dreamt of a house under 3,000 square feet, Gen X-ers thought 3,311 square feet was ideal, while millennials upped the size to 3,320 square feet. Along the same lines, dream homes of the oldest generation contained an average of 3.7 bedrooms and 3.1 bathrooms, while the ideal number of beds and baths for millennials was 4.2 and 3.3, respectively.

Related: 4 Popular Mortgage Programs for First-Time Home Buyers

However, when crafting the perfect starter home rather than a dream home, all generations leaned toward the smaller size. This time, the ideal size was just 1,442 square feet for baby boomers, 1,582 square feet for Gen X-ers, and 1,726 square feet for millennials. Homeowners even required fewer bedrooms and bathrooms, with Gen X-ers and millennials agreeing that 2.8 bedrooms were ideal.

Perfect Area and Amenities

Finding a home with the perfect square footage and number of bedrooms and bathrooms may be a step in the right direction, but it means nothing when the location isn’t right. Picking a “good” location means something different to everyone, but according to the study, the majority of men and women said affordability of the area was the most important thing (5).

Low crime rates and proximity to workplace were also among the top factors, with women more likely to consider both. Men, on the other hand, were more likely to take climate and geography of the area into consideration.

The most important amenities also differed between the genders—while central air conditioning, a private backyard, storage, and plenty of natural light topped the list, women were more likely than men to name them as important. In fact, the only amenities men wanted more than women were granite countertops, exterior balconies, smart home technology, and an elaborate front door.

However, when it comes to naming the most important amenities for a dream home, a walk-in closet in the master bedroom and a separate laundry room entered the top five and men's interest in an oversized garage spiked (from just 15 percent in a starter home to 56 percent in a dream home).

Related: The American Dream: How Has the Definition Changed Over the Years?

Dreams Do Come True… Eventually

Millennials may wish for a larger home than previous generations, and women may be after a long list of amenities, but these ideal starter homes aren’t all that out of reach. In 2017, the average single family home was 2,660 square feet (6)—significantly larger than all generations' ideal size of their starter home. But rising house prices matched with lagging inflation and wage growth means both dream homes and starter homes are increasingly out of reach (7).

Until home prices begin to normalize, prospective homeowners are forced to put away their wish lists and settle for a more affordable home.

Sources

  1. https://www.forbes.com/sites/neilhowe/2018/08/27/are-millennials-killing-the-u-s-housing-market/#762ef5ea1ead
  2. https://www.forbes.com/sites/megangorman/2019/08/31/how-millennials-are-revolutionizing-the-home-buying-process/#76ad7ff92a02
  3. https://www.usatoday.com/story/money/2018/05/07/millennials-buying-first-home-skip-starter-house-buy-dream/582309002/
  4. https://www.businessinsider.com/millennials-vs-baby-boomers-big-houses-real-estate-market-problems-2019-3
  5. https://www.investopedia.com/financial-edge/0410/the-5-factors-of-a-good-location.aspx
  6. https://www.statista.com/statistics/529371/floor-area-size-new-single-family-homes-usa/
  7. https://www.cnbc.com/2018/06/06/us-house-prices-are-going-to-rise-at-twice-the-speed-of-inflation-and-pay-reuters-poll.html

What trends have you noticed younger buyers or renters are seeking out? Are you doing anything to accommodate their needs and wants? 

Let’s talk in the comment section.

Jamie Greenberger is an Assistant Editor in the homes and real estate industry. With 2+ years experience in copywriting, editing, and research, she offers a fresh take on the real estate industry. ...
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    Shafique Kassam
    Replied 10 months ago
    am I taking crazy pills? where does one find a livable house for 100k? i live in Dallas, and if I were to consider a home in the 100k range, it would be in a really downtrodden area surrounded by a very low combined-household-income level. even a crappy 1.5 condo is 250K minimum in a decent area..
    Jon Thomas
    Replied 10 months ago
    I also live in Dallas. You're average starter home is going to run you maybe 180K and above if you are looking for a nicer 2 bed/bath and above. You have to live in class C neighborhoods or below to get a house worth below 130K.
    Alvin Henson from Towson, MD
    Replied 10 months ago
    It depends on your definition of "liveable" and your geographical location. In Baltimore City and the surrounding counties, it can easily be done with few compromises. I'm closing on my first investment property next week and I paid $50k for it and after light renovations, I might be $55-57k all in. I'd live there myself if I had to. Again, it's all about your definition of "liveable".
    John S Lewis from Jackson, NJ
    Replied 10 months ago
    Hey Alvin - I'm also interested in the Baltimore market. I'm in NJ, and taxes just crush the cash flow out of deals. And the all in price is way more than what you did.
    Tomer Versano Investor
    Replied 10 months ago
    Congrats on closing on your first property, Alvin! Is it in Baltimore? I'm an investor in Philadelphia but looking in Baltimore as well, would love to hear about your process there.
    James Pierce Real Estate Agent from San Francisco, California
    Replied 10 months ago
    “Until home prices begin to normalize..” what does that mean? Every market is different, with various price points. This statement sounds just like what we read 10-15-20-25-30 years ago, and prices keep going up in popular markets. Why? Lack of inventory AND people want to live there. Otherwise, Why, again? Government regulations- that add $$$$$ to the price of newly constructed homes. If your definition of “normal” is 1980 or 1990 home prices, why not look at properties in states where people are moving out (example: Butte, Montana)? Cheap housing there! But poor quality, too. Look beyond price to the most important thing: Quality Of Life. Hint: This is why so many people are selling and moving out of Taxifornia (oops, sorry, California).
    Daniel Sarraf from Los Angeles, California
    Replied 10 months ago
    Interesting that millennial want bigger houses with more beds and baths when we're having less kids. Hmm.
    Carole Pagan
    Replied 10 months ago
    Really? A starter home of over 2000 sq. ft. in Illinois for 145K? Maybe out in the corn fields.
    Gabriel Pais Rental Property Investor from High Point, NC
    Replied 10 months ago
    Thank you for sharing this amazing & essential data, it helps plan for the future!
    John Michael Thomas Flipper/Rehabber from Inland Empire, CA
    Replied 10 months ago
    Interesting study and really useful data, thank you. In addition to the general data, specific features that are in-demand vary quite a bit from neighborhood to neighborhood, and sometimes can be pretty surprising. For example, you might be able to guess that homes with wood stoves and garages sell for a premium in Lake Arrowhead, CA (where it snows). But even many local realtors don't know that homes in and around Riverside, CA that have RV parking sell for over 7% more than those that don't, all other things being equal... yet that's what the data shows. Unfortunately the only way to find this kind of detailed info on the local market is to talk to a *very* good local realtor, or analyze the MLS data pretty deeply. Since most people don't have the ability to crunch the MLS data this way, I generally recommend that investors find a really good local agent who can give feedback on the most in-demand features in the area. (And try to do it *before* you plan your rehab, so you can plan to ensure the home has the features that will help it sell at the highest price).
    Vaughn K. from Seattle, WA
    Replied 10 months ago
    Some of that was not what I would expect... Both with generational differences and gender differences. Interesting though.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 10 months ago
    Interesting survey, thank you Jamie!
    Craig Anthony from Orlando, Florida
    Replied 10 months ago
    Good information you have listed. I understand it is a generic census, but a good indicator. It gives you a starting point for conversation as you find out the particulars.
    Laura Verderber Rental Property Investor from Fairhope, AL
    Replied 6 months ago
    All of these home sizes are huge! I live in a 1301 sq. ft. house plus a 300 sq. ft. garage. 4 bedrooms and 2 bathrooms. Plenty of space for my family, I only wish I had a bigger yard, which I compromised on because of the killer location. I'm currently renovating a house that's 2389 sq. feet. Apparently that's considered starter home size?? I feel like it's huge. The bill to renovate is certainly is.