In the 2013 study What Home Buyers Really Want, NAHB presented detailed data on the housing preferences of all home buyers combined. While a representative sample of all types of buyers is the first place to start when trying to analyze what is important to buyers in general, it is also a fact that not all buyers want the same things, and therefore further analysis is necessary to identify any relevant differences that may exist between distinct groups.
Among other demographic variables, such as age, income, or stage of life, a buyer’s race or ethnicity can play a significant role in how he/she evaluates the characteristics and features of a prospective home. The 2014 study What Home Buyers Really Want: Ethnic Preferences further analyzes the data from the 2013 study to compare and contrast how housing preferences are affected– or not –by the racial/ethnic background of the home buyer, after controlling for factors such as age and income. The analysis focuses on four separate groups of buyers:
This latest study analyzes the data to provide NAHB members the most accurate and detailed information on what home buyers of these different racial/ethnic backgrounds really want, so that builders can deliver the home (and community) their target market is looking for.
Survey data show there are significant demographic differences among the four racial/ethnic groups. For example:
Minority home buyers are younger than White (non-Hispanic) buyers. The median African-American buyer is 39, the median Hispanic buyer is 37, and the median Asian buyer is 36. The median White buyer is 43 years old. This age difference can be largely explained by the fact that minority home buyers are more likely than White buyers to be first-time buyers, who are typically younger than trade-up buyers.
The share of buyers who are married varies significantly across the four groups: 80 percent of White buyers are married, 79 percent of Asians, 74 percent of Hispanics, but only 50 percent of African-Americans.
Asian home buyers have the highest median household income of all four groups, $72,797, compared with $67,747 for Whites, $50,221 for Hispanics, and $43,774 for African-Americans. Asians also expect to pay the most for their next home: $283,469, compared with $205,775 among Whites, $181,444 among Hispanics, and $176,397 among African- Americans.
It is well known that characteristics like age, type of household, and income often make a difference in housing preferences. This raises a question about whether these factors may be responsible for apparent racial differences in the survey data. For the first time in the history of NAHB’s buyer preferences research, a special analysis was conducted to reveal if any differences in preferences among these groups are statistically significant after controlling for factors such as age, income, region, and household type.
The rest of the article will present survey findings grouped in two sections. In the first section, results will be shown where housing preferences (of at least two of the minority groups) are significantly different from those of White buyers, even after controlling for demographic factors. In the following section, on the other hand, results will be shown where housing preferences are not affected by race/ethnicity, since any differences can be explained by differences in age, income, household type, and region among the groups.
Differences in Housing Preferences Due to Race/Ethnicity
White buyers want a median of 2,197 square feet, about 14 percent more than they have in their current home. African-Americans want 2,664 square feet, 49 percent more; Hispanics want 2,347, 32 percent more; and Asians want 2,280 square feet of finished space in their next home, about 25 percent more than they currently have.
Minorities are less likely to want large lots. Whereas only 38 percent of White buyers consider the lot size irrelevant or would be satisfied with a small 1/8 acre plot, that share is significantly higher among Asians (64 percent), African-Americans (49 percent), and Hispanics (44 percent).
Most buyers of all racial/ethnic groups want an open kitchen-family room arrangement, particularly White buyers (77 percent) and Asian buyers (71 percent), but also 61 percent of African-Americans and 64 percent of Hispanics.
Sixty-three percent of White buyers will be satisfied having up to three bedrooms, compared to 51 percent of African-Americans, 49 percent of Hispanics, and 56 percent of Asians.
Given a choice of single-story, two-story, or split level, a majority of White buyers (61 percent) and a plurality of Hispanic buyers (45 percent) prefer a single-story home. In contrast, pluralities of Asians (48 percent) and African-Americans (44 percent) prefer two-story homes.
The preferred location for the master bedroom (among those that want a 2-story home) is in the second floor for a majority of Asian buyers (63 percent), African-Americans (55 percent), and Hispanics (51 percent). Forty-four percent of White buyers also want the master bedroom upstairs, but 11 percent want two master suites – one on each floor.
Placing the washer/dryer in the 1st floor of the home is a good bet, as buyers of all backgrounds tend to prefer this location, particularly White buyers (76 percent), but also 51 percent of African-Americans, 50 percent of Hispanics, and 46 percent of Asians. Nonetheless, about 20 percent of Asians and Hispanics would rather have the laundry equipment in each the garage or the basement.
When given estimates of the probable differences in cost, a majority of African-American buyers (55 percent), White buyers (54 percent), and Asian buyers (53 percent) want a 2-car garage, along with 47 percent of Hispanics. A garage for 3 or more cars, on the other hand, is preferred by 23 percent of White buyers vs. 15 percent or fewer of the minority groups.
Compared to White buyers, significantly higher shares of the three minority groups consider the dining room essential (unlikely to buy home without this feature): 49 percent of Asians, 46 percent of African-Americans, and 45 percent of Hispanics. Among Whites, the essential share is 30 percent.
The laundry room is the most indispensable of all the specialty rooms for White, African-American, and Hispanic buyers, as 90 percent or more of each group rate it essential/desirable. For Asian buyers, on the other hand, the living room ranks number one (86 percent), followed by the laundry room (85 percent).
Builders and designers need to be aware of what buyers do not want, and therefore will not pay for. More than 50 percent of buyers from all racial groups reject the idea of having an elevator in their home (rating it ‘do not want’ – unlikely to buy a home that included it). Many also do not want to live in a golf course community or have only a shower stall in the master bath with no tub.
A majority of buyers from all racial categories prefer all amenities (including electronic systems and technology features) included in the base price of the home, particularly African-Americans (65 percent), but also Asians (56 percent), Hispanics (52 percent), and White buyers (52 percent). The remaining shares would prefer a basic home with amenities offered as options instead.
Understanding that home buyers will naturally tend to say they want most of everything in the absence of any constraints, the survey asked them which of seven items they would be willing to accept to make the home more affordable. For 50 percent of White buyers, and 42 percent of both African-Americans and Hispanics, the best option is to allow some space to remain unfinished. Forty percent of Asians would also accept unfinished spaces, but only as the third option, as 44 percent would rather buy a smaller lot and 42 percent a smaller house.
Majorities of 64 percent to 71 percent of buyers in all racial groups prefer a single master suite plus three standard bedrooms, rather than the alternative of two masters plus one standard bedroom.
Faced with the option of a smaller house with high quality products and amenities vs. a bigger house with fewer amenities, 65 percent of White buyers would choose the smaller house, as well as 58 percent of Asians, and 51 percent of Hispanics. Among African-Americans, on the other hand, a majority of 53 percent would prefer the bigger house with fewer amenities.
There is no consensus on the need for a living room. White buyers are evenly split (38 percent would buy home without it, 40 percent would not), a response similar to that of Hispanics (42 percent would buy without living room, 37 percent would not). Meanwhile, African-Americans and Asians tend to show more inclination for the living room, as 51 percent and 52 percent, respectively, would not buy a home without it.
The central city is the preferred location to buy a home for only 6 percent of White buyers, 7 percent of Asians, 11 percent of African-Americans, and a much larger 19 percent of Hispanics. A majority of all groups of buyers would prefer to buy a home in the suburbs.
Comparing results on the sources buyers use to find and hire contractors shows that positive word of mouth remains the most effective marketing strategy a company should strive for. A recommendation from friends, relatives, and neighbors is how the majority of buyers would go about finding the right contractor for a job – but more likely so among White buyers (73 percent) than African-Americans (53 percent), Hispanics (56 percent), and Asians (68 percent).
Most buyers of all backgrounds prefer a new home, whether offered by a builder or custom-built on their own land, particularly African-Americans (69 percent), but also Hispanics (56 percent), Whites (54 percent), and Asians (52 percent).
Differences in Housing Preferences Due to Other Demographic Factors, Not Race/Ethnicity
Home buyers rated more than 120 features as either essential, desirable, indifferent, or do not want. A number of items appear on the top 10 most wanted list of all the racial groups and so should be considered as must-haves: the laundry room, energy-star rating for appliances and the home itself, as well as exterior lighting. Preference for most of the features included in the top 10 most wanted lists for all groups are not affected by the racial background of the buyer, with a few exceptions, notably the patio and the dining room.
In the kitchen, table space for eating, a walk-in pantry, and a double sink are the top three features most likely to be rated essential or desirable by buyers from all racial/ethnic groups.
In the bathroom, an exhaust fan, a linen closet, and both a shower stall and a tub in the master bath are the three features most likely to be rated essential or desirable by buyers from all racial/ethnic groups.
When rating windows, the top two features have to do with energy savings: an energy-star rating and triple-pane glass are first and second most wanted, respectively, for buyers in each of the four groups.
Around 80 percent of buyers from all racial categories consider garage storage essential or desirable.
The two most wanted outdoor features are exterior lighting and a patio, both rated essential/desirable by more than 80 percent of buyers across all racial backgrounds. Minority groups do tend to have stronger preferences for patios than White buyers, however.
A full bath on the main level is the highest ranked accessibility feature among White and Hispanic buyers. Wide hallways at least 4 feet wide claim the top spot among African-American and Asian buyers.
A wireless home security system is the most wanted technology across all groups: 63 percent of African-Americans would like to have it in their next home, as well as 57 percent of both Asians and Hispanics and 48 percent of White buyers.
Another way to get buyers to reveal what they really want is to force them to trade-off between two alternatives for the same amount of money. When put in this position, over 80 percent of buyers in each of the four racial and ethnic groups would choose a highly energy efficient home with lower utility bills rather than one costing 2-3 percent less without those features.
When asked in broad and generic terms about the impact that building their homes may have on the environment, most buyers of all racial groups report being concerned for the environment and even wanting a “greener” home, but not to the point of being willing to pay more for such a home. Only small minorities of each group (Whites: 14 percent; African-Americans: 15 percent; Hispanics: 15 percent, and Asians: 10 percent) would be willing to pay for a home broadly defined as helping the environment.
Although most buyers are not willing to pay more for a home simply to help the environment, most are quite concerned about a tangible benefit they would receive from a “greener” home, i.e. lower utility costs. The latter is gleaned from the 70 percent or more of buyers in each of the racial groups who agreed or strongly agreed with the following statements: “projected utility costs are very important,” “projected utility costs would influence purchase decision,” and “prefer to purchase from a builder providing energy ratings.”
So how much extra are buyers willing to pay to achieve their desired energy savings? In order to save $1,000 a year in utility costs, White buyers are willing to pay an additional $6,774 in the upfront price of the home; African- Americans $7,578; Hispanics $9,146, and Asians $8,251.
When buyers are asked about which particular energy-saving feature they would prefer to achieve those savings, the top two most wanted (by all groups) are energy-star rated appliances and an energy-star rating for the whole home.
Of the five development features listed (infill, mixed use, gated, high density, or golf course), none is rated essential/desirable by a majority of any the four buyer groups. Infill development (in the center of an older neighborhood), however, is the likeliest to be acceptable, as 36 percent of Whites, 47 percent of African-Americans, 43 percent of Hispanics, and 45 percent of Asians rate it essential/desirable.
Neighborhood green areas are very important to buyers of all racial/ethnic backgrounds. In fact, a park area and walking/jogging trails are the top two community characteristics that would seriously influence White, African- American, and Asian buyers to move to a new community. For Hispanics, they rank first and third, with an outdoor swimming pool in the number two spot.
Home buyers see value in professional designations, as more than 70 percent of buyers in all the racial categories agree that contractors with specialized designations “provide better quality work and craftsmanship,” and “provide better service levels.”
Seventy-eight percent of White buyers want up to 2½ baths. Seventy percent of African-Americans and 75 percent of Hispanics will be satisfied with up to 2½ baths, as well as 77 percent of Asians.
Additional Information about the Study
The report What Home Buyers Really Want: Ethnic Preferences is organized so that each question is first discussed separately for each one of the four racial/ethnic groups, followed by a combined analysis where any similarities or differences among the groups are pointed out. Appendixes show responses separately from White, African-American, Hispanic, and Asian buyers for every question, broken down by region, age, income, number of homes owned, type of household, price expected to pay for next home, and generation. A special analysis was conducted to reveal if any differences in preferences among these groups are statistically significant after controlling for factors such as age, income, region, and household type. Shaded rows in the Appendix tables indicate cases where differences between the minority group and White buyers are statistically significant and not driven by disparities in these demographic factors.
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