WHAT ARE BUYERS LOOKING FOR?

Market Intelligence

What Buyers Want
Highlights from NAR's Profile of Buyers' Home Feature Preferences

by Dr. Paul C. Bishop, Harika “Anna” Barlett and Jessica Lautz, NAR Survey Research

Times have changed for home sellers, and the housing market isn't what it was. Sales of both existing and new homes are down, price appreciation has fallen from its breakneck, double-digit pace of a year ago, and the supply of homes available for sale – housing inventory – is at record levels. The mortgage market is still recovering from the subprime fallout. While owners trying to sell their homes in the current housing "doldrums" certainly face challenges, home buyers benefit from an ample supply of homes and the opportunity to find homes with features and amenities that most closely match their needs.

So how can sellers "attract" buyers to their homes. One way is to make sure that homes listed for sale offer those potential buyers the features that they really want. NAR’s recent 2007 Profile of Buyers’ Home Feature Preferences looks at those home features considered important during the search process, the presence of those desired features in the homes purchased, and in those cases when the home purchased lacks particular features, home buyers’ willingness to pay extra for them. Below we present highlights from the Profile that address those issues.



Home Features Desired Most by Potential Buyers
The most desired home feature was central air conditioning, ranked “very important” by nearly three quarters of home buyers. An oversized (two-or-more car) garage, a walk-in closet in the master bedroom, and a backyard or play area were also rated as “very important” by at least half of recent home buyers.

Repeat vs. First-time Buyers. The preference for certain home features can differ based on whether a potential buyer is a repeat buyer or a first-time home purchaser. Repeat buyers placed more importance than first-time buyers on almost all home features examined, with the exception of proximity to work and a backyard or play area. The features repeat buyers were much more likely to desire than he first-time buyers included oversized garages, a walk-in-closet in the master bedroom and a separate shower in the master bathroom. Buyers of new homes were also more likely than buyers of previously owned homes to consider most home features, including many luxury items, to be very important.

Regional and Location Differences. The importance buyers place on particular home features also varies by region. For example, while buyers in all regions rated central air conditioning as one of the top two most important features, it was very important to over 90 percent of buyers in the South and over 80 percent in the Midwest, compared to 41 percent in the Northeast, and 59 percent in the West. Buyers in the South also placed higher importance on newly built homes, porches, single-level homes and monitored security systems. Buyers in the West had a higher-than-average preference for lawn sprinkler systems, fencing, patios, and oversized garages. Fully or partially finished basements were more important in the Midwest, and reserved parking in the Northeast.

Buyers' preferences also differ by the location of the home purchased, mostly based on the neighborhood features. Those who purchased a home in an urban area had a higher-than-average preference for being near public transportation, reserved parking, and proximity to work. Suburban home buyers indicated a higher preference for oversized garages, walk-in closets, and new homes. Buyers in rural areas were more likely than average to prefer wooded lots and a water treatment or filtration system.

Preferences by Age. Home feature preferences also vary by age of the home buyer. For example, among older buyers, features such as a walk-in-closet in the master bedroom and a separate shower enclosure in the master bathroom were more often viewed as very important; and a backyard or play area, and proximity to work and schools were less often considered as important among these buyers. Buyers over 44 years old had a higher preference for single-level homes than the younger buyers. Buyers aged 55 or older were more interested in homes that are cable or satellite TV ready, equipped with a lawn sprinkler system, and on a flat lot. Buyers over 64 years were more likely to prefer sidewalks and an air filtration system, and less likely to prefer fencing and porches.

Features in the Home Actually Purchased
Home buyers consider many features as important when searching for a home, but they sometimes need to make compromises when actually purchasing a property. Among recent home buyers who considered each of the features examined as somewhat or very important, the home purchased most likely included cable-satellite TV readiness, high speed Internet access, central air conditioning, an oversized garage, and neighborhood features such as proximity to schools, to a park or playground, and to shopping. Among the desired features least likely to be present in the home purchased were an intercom system, a water treatment or filtration system, homes with handicap accessibility features, and extra-wide doorways.



Repeat vs. First-time Buyers. There are differences on what features buyers comprised on depending on whether they are repeat purchasers or those buying their first home. Repeat buyers were more likely to purchase a home with most of their preferred features, including many luxury items. Compared to first-time buyers, they compromised most on neighborhood features, such as proximity to work, a park or playground, and public transportation. Buyers of new homes did not make many compromises on the size or luxury items, but mostly on neighborhood features.

Regional Differences. The likelihood that a preferred feature is present in the home purchased varies by region. Desired features much more likely to be present by region included intercom systems, hardwood floors, bay windows, skylights, proximity to public transportation and reserved parking in the Northeast; a water treatment or filtration system, an intercom system, and homes more than 100 years old in the Midwest; a tennis court, being near or on a golf court, porches, and a monitored
security system in the South; and lawn sprinkler systems and fencing in the West. Among the desired features, the ones much less likely to be present in homes purchased in each region compared to the national average were lawn sprinkler systems, fencing, patios, and new homes in the Northeast; lawn sprinkler systems, fencing, and monitored security systems in the Midwest; proximity to public transportation, fully or partially finished basements, and intercom systems in the South; and usable/ accessible attics, wooded lots/trees, and whirlpool baths in the West.

Age of Buyer. Recent home buyers aged 25 to 44 purchased a home with most of the features they desired. As the age of the buyer increased, the likelihood of compromises increased, particularly among those aged 65 and over, and especially on neighborhood features. For example, less than 50 percent
of buyers 65 or older purchased a single level home, despite ranking this feature as important.

“Will Pay for AC”
Home buyers value some features so much that they reported being willing to pay more for a home if that feature was present. The most frequently reported features for which buyers would be willing to pay more included central air conditioning, walk-in closets, hardwood floors, high-end kitchen appliances, oversized garages, and patios. The least frequently mentioned features for which buyers would pay extra included homes that were more than 100 years old, a tennis court, a sloping lot, being on or near golf course, and handicap accessibility. Home buyers who purchased a home without a valued feature were willing to pay the most for a waterfront property, typically an extra $4,760; a home less than 10 years old, typically an extra $3,800; and fully or partially finished basement, typically an extra $2,970.



Among buyers who purchased homes below and above the median price, the rank ordering of the features for which they were willing to pay extra changed little. However, there were significant differences in the amounts that buyers would typically pay for some of the features. For example, buyers of homes below and above the median price were willing to pay the most for a waterfront property; but among those with homes priced below the median, the typical extra amount was $3,360 and $8,240 among those homes priced above the median. For a cul-de-sac lot, and proximity to shopping or public transportation, those buyers with above median priced homes were willing to pay almost twice as much as those with homes below the median price. For features including central vacuum, high-speed Internet access, and intercom system, there was not much difference in the extra amount these two groups of buyer were willing to pay.

What Does It Mean to REALTORS® and Their Clients
The information provided in the Profile provides insights into the priorities of home buyers. For instance, sellers considering putting their home on the market may want to consider what “buyer preferred” features might be added to the home before it is listed. By so doing, the home could attract more buyer traffic, and likely increase the sales price. REALTORS® who are working with clients to sell homes can more accurately determine the “value” of each home feature and thus determine a proper listing price. The data and analysis in the 2007 Profile of Buyers’ Home Feature Preferences is another tool for real estate professionals to use as they market their clients' homes to potential buyers.



The 2007 NAR Profile of Buyers’ Home Feature Preferences is based on a survey conducted earlier this year. The 39-question survey questionnaire was mailed to a random national sample of 40,000 home buyers who purchased a home between late 2005 and early 2007. The survey gathered information about those features that buyers considered very important when searching for a home and whether or not those features were present in the home they actually purchased