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Top 10 Features for Upscale Homes

Special Studies, July 1, 2013
By Paul Emrath, Ph.D.
Economics and Housing Policy Group
National Association of Home Builders
 
Report available to the public as a courtesy of HousingEconomics.com
 

This study reports on the top features for an upscale new home, culled from a long list of items covered in NAHB’s recent survey on What Home Buyers Really Want.

Because a home is a complex commodity, with many features that can make it more or less desirable to particular customers, the NAHB survey included a long question that asked recent and prospective buyers to rate a list of many (approximately 120) different features on a consistent scale. The features spanned many aspects of the home, including windows, doors, kitchens, baths, specialty rooms, decorative features, accessibility, energy savings, and type of development in which it’s located (see Appendix 1 for complete list). The survey asked buyers to rate each feature on the list as “essential/must have,” “desirable,” “indifferent,” or “do not want.”

Basic results were summarized two months ago in the May Special Study. This study reports on a statistical analysis of home features (described in Appendix II) that differentiated the preferences of upscale buyers from others. The analysis identified a group of features that cut across the gamut of kitchen, outdoor, specialty and community amenities and tended to be luxury items—not features strongly demanded by all home buyers, but luxury features usually appropriate in upscale homes, and usually inappropriate at the more affordable end of the price spectrum.

That the features grouped together this way tend to be luxury or upscale items is clear from the nature of the items, as well as the different ratings buyers assign to them depending on the price they pay for their homes. For items at the top of the upscale list, a considerably greater share of buyers expecting to pay at least $500,000 want the feature, and a considerably greater share of buyers expecting to pay under $150,000 expressly do not want it.

The top 10 upscale features identified by this method are shown below. Next to each item, a graph shows the share of buyers who both do and do not want the feature at the extremes of the price distribution. Following the precedent of the Late Show with David Letterman, the top 10 list is presented in reverse order:

#10. A Game Room10 Game Room

Some homes have a game room intended for specific recreational activities like playing pool or table top games. Only 27 percent of all buyers in What Home Buyers Really Want rated a game room as rated essential or desirable.

However, the “desirable/essential” share for a number of the specialty rooms in the survey rises with the price of the home, and the game room is one of these. Over one-third of buyers expecting to pay at least $500,000 who want a game room, compared to 25 percent for buyers expecting to pay under $150,000. At the other end of the preference scale, 36 percent of buyers expecting to pay under $150,000 explicitly say they are unlikely to buy a home if it includes a game room, compared to 27 percent of buyers expecting to pay $500,000 or more.

Although these differences are significant, a game room is only #10 on the list of upscale features. For items higher on the list, the high-price/low-price spreads are greater than 10 percentage points, usually much greater.

#9. Home in a Golf Course Community9 Golf Course

Nearly two-thirds of all buyers say they do not want a home in a golf-course community, making it the second most “unwanted” feature out of the 120 in What Home Buyers Really Want. Clearly, there are many successful golf course communities in the U.S., but it is something of a niche market.

It’s also clear that the niche is at the high end of the price spectrum. A sizable 50 percent of home buyers expecting to pay $500,000-plus who do not want to live on a golf course is fairly high at 50 percent, but the share is 77 percent for buyers of homes priced under $150,00. A golf course community qualifies as an upscale amenity not because it is always appropriate for the more expensive homes, but because it is seldom appropriate for homes at the more affordable end of the market.

#8. An Exercise Room8 Exercise Room

Much as some owners will set aside an area of the home for games, some want an area dedicated to exercise—often with a treadmill, weights, or other specific type of equipment. This is another of the specialty rooms in the “What Home Buyers Really Want” for which consumer preferences change regularly with the price of the home.

At the two extremes, 48 percent of buyers expecting to pay at least $500,000 want a game room, compared to 28 percent of buyers expecting to pay under $150,000. And 33 percent of buyers expecting to pay under $150,000 explicitly say they are unlikely to buy a home if it includes a game room, compared to 18 percent of $500,000-plus buyers.

#7. A Wet Bar7 Wet Bar

As the term suggests, a wet bar is a place for mixing and serving beverages that includes a sink. Plumbing and installing plumbing fixtures is a type of job 93 percent of single-family builders always subcontract, according to survey of builders NAHB conducted in July of 2012.

Given the added cost, it’s not surprising that this is another upscale item for which demand is concentrated at the high end of the price spectrum. Nearly half of buyers expecting to pay under $150,000 are unlikely to buy a home if it includes a wet bar, compared to only 21 percent for buyers expecting to pay $500,000 or more. Forty-two percent of $500,000-plus buyers do want a wet bar, compared to 28 percent for under-$150,000 buyers.

#6. An Elevator6 Elevator

Number 9 on the list (a golf course community), was the survey’s second most “unwanted” feature overall. Number 6 is the single feature explicitly rejected by home buyers more often than any other—an elevator, something a full 70 percent of all buyers say they do not want.

Like a golf course, to the extent that a niche market exists for elevators in single-family homes, it is strongly concentrated at the high end of the market. Only 10 percent of buyers expecting to pay under $150,000 rate an elevator as at least desirable compared to 28 percent of buyers expecting to pay $500,000 or more. Even in the $500,000-plus range, half of buyers are unlikely to buy a home with an elevator, but the share is over 79 percent for buyers of homes priced under $150,000. The low desirability may be partly explained by a cost running into five figures, and buy the preference of a majority of buyers for a single-story home.

#5. Two-story Entry Foyer5 Two Story Entry Foyer

The top half of the list starts with a feature that is also linked to the underlying preference for a home taller than a single story—a two-story entry foyer.

A two-story foyer creates a visually impressive entrance at the cost of space that needs to be conditioned or could be dedicated to a more utilitarian function. (From the builder’s perspective, it also introduces some complications in framing, covering and insulating the walls). This may help explain why 47 percent of buyers expecting to pay under $150,000 explicitly reject a two-story foyer when asked, compared to 26 percent of buyers expecting to pay $500,000 or more.

#4. An Outdoor Kitchen4 Outdoor Kitchen

Although an outdoor kitchen may be a relatively simple expanded grilling area, it may also be a more elaborate affair with many of the amenities found in an indoor kitchen, including a sink, refrigerator, lighting, cabinetry, and natural stone countertops. Variants of these products are sometimes designed specifically for use outdoors—by waterproofing them, for example.

It’s probably not surprising that what often amounts to a second complete kitchen constructed outdoors qualifies as a luxury item that seems primarily appropriate in upscale homes. Nearly half of buyers expecting to pay at least $500,000 rate an outdoor kitchen as at least desirable, compared to a little over a quarter of buyers expecting to pay under $150,000. And 36 percent of buyers expecting to pay under $150,000 are unlikely to buy a home if it comes with an outdoor kitchen, compared to only 18 percent of $500,000-plus buyers.

#3. Kitchen With a Wine Cooler3 Kitchen With A Wine Cooler

Following the outdoor kitchen, #3 on the list of upscale features is an amenity sometimes included in indoor kitchens—a wine cooler. A wine cooler can be of almost any size, but when evaluating a cooler as an integral feature that would be included in the price of a home, most consumers probably envision something large enough to crowd out another appliance or essential general storage space in a smaller kitchen.

As a general rule, relatively few home buyers demand a wine cooler in their kitchens. In the survey overall, it was one of only three kitchen features rated desirable or essential by fewer than 30 percent of the respondents. However, 46 percent of buyers expecting to pay at least $500,000 rate a wine cooler that favorably, compared to only 15 percent of buyers expecting to pay under $150,000.

#2. Two-story Family Room2 Two Story Family Room

Like a two-story entry foyer, a two-story family room consumes space that needs to be heated or could be used for some other purpose. The space consumed is generally greater for a two-story family room, because there is more floor space in the typical family room than the typical entry foyer.

Over half of buyers expecting to pay under $150,000 say they are unlikely to buy a home with a two-story family room, compared to 29 percent of buyers expecting to pay at least $500,000. And 32 percent of the $500,000-plus buyers rate a two-story family room as at least desirable, compared to only 18 percent of buyers expecting to pay under $150,000.

#1. Kitchen With a Warming Drawer1 Kitchen With A Warming Drawer

Like a wine cooler, a warming drawer is a specialty item that takes up space which would be allocated to more general purposes in a small kitchen. Also like a wine cooler, it is one of the few kitchen features rated essential or desirable by fewer than 30 percent of home buyers overall.

However, a significantly larger share (42 percent) of buyers expecting to pay at least $500,000 want a warming drawer, compared to only 15 percent of buyers expecting to pay under $150,000. Only 14 percent of the $500,000-plus buyers say they are unlikely to buy a home with a warming drawer—the smallest “do not want” percentage for any item discussed above, which helps explain why a warming drawer in the kitchen ranks as the #1 feature most appropriate in upscale homes.

Honorable Mention and Other Caveats

It is purely a matter of convenience to truncate the list of upscale amenities at ten. Five other features missed the top-10 list by a very slim margin and deserve honorable mention: His & Her baths, a laundry chute, an outdoor fireplace, sensor-operated faucets, and a media room.

Another caveat is that the statistical analysis could only be applied to features that home buyers rated on the same scale. Features like swimming pools and equestrian facilities were covered in a separate, differently-formatted question on community amenities and couldn’t be included in this particular analysis. (An analysis of this question, showing that swimming pools often influence buyers to choose a community while equestrian facilities do not and many other related results, appears in Chapter 11 of What Home Buyers Really Want.)

A final caveat concerns the nature of a study that focuses on upscale amenities. It can be interesting and useful to analyze the high end of the price scale, but the lower end is extremely important and shouldn’t be ignored. The base of the U.S. housing market is supported by a large number of households with relatively modest incomes who can only afford homes at relatively modest prices. Over a broad range of house prices, the further down you go, the more potential buyers you reach. NAHB provides an online Housing Affordability Pyramid specifically to illustrate this point.

For more information about this item, please contact Paul Emrath at 800-368-5242 x8449 or via email at pemrath@nahb.org.


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