Homes are moving from strictly family nurturing spaces to ones that include work, entertainment and serious social interaction.
By Robert Isler
High function and wellness features are key attributes sought by a wide swath of prospective homeowners in the post-pandemic market.
These were among the findings shared by Molly Carmichael, principal at Zonda, a firm specializing in gathering housing and real estate data, from the company’s latest consumer insights survey. She began her January webinar, “Top Consumer Community and Home Design Trends for 2021,” with a broad overview of challenges before diving into specific home purchase/remodel drivers in the current environment.
Effects of COVID-19
Carmichael highlighted key lingering issues related to COVID-19. Topping the list was a continuation of the economic downturn, followed by investment challenges, a job recovery that is falling far short of expectations, the impact of migration as homeowners leave congested metro areas, and finally, rising debt and the threat of eviction that have become all too real for many. She then discussed the significant increase in those who work remotely, also brought on by the pandemic, but not necessarily a bad development. Currently, 62% of Americans are working from home, a trend that Carmichael believes will last for at least the next two to five years, as business leaders realize it has not hurt productivity. It is a reality that has contributed to other trends impacting the home.
Functional Spacing
Based on consumer feedback, homes are becoming more crowded, with space at a premium. For instance, pet ownership grew by 15% in 2020 alone, a sharp increase that can easily be linked to the pandemic. Additionally, Carmichael expects multigenerational households, which had already been edging up, to gain in popularity over the next two years and beyond. Nine percent of all households currently are multigenerational, with either elderly parents or adult children living with the homeowner full-time. Another 32% said they would consider going that route.
Along with more crowded homes, the pandemic altered priorities for many. Simply put, there is an increased desire to make home spaces as functional as possible, with flexibility and creativity most in demand. Space may now be needed for a small second office or a home gym, as the purchase of Peloton and similar equipment is skyrocketing at the expense of membership at retail establishments. One of the ways “smart sizing” can be achieved is by shrinking utility spaces and bathrooms in favor of more square footage elsewhere. Carmichael noted that for any of these creative spacing ideas to work, good lighting is key. She also emphasized that such compromises on spacing do not apply to kitchens.
Sweet Spots of Home Buying
Diving into the macro picture, Carmichael shared a graphic revealing that at today’s record-low interest rates, $3,000 a month can support a $650,000 home, while $1,000 is all that’s needed for a $250,000 property. She added that on a national level, the most popular price range for current home buyers is between $250,000 to $350,000, with 28% of potential buyers focusing on those levels in 2020 compared to just 23% in 2019.
In general, smaller, less expensive homes were more desirable in 2020 — at least partially owing to mature Gen Y’ers (age 26 to 35) seriously entering the market for the first time. Those ready to retire (age 56+) also do not need a larger home. These two groups have also been the fastest growing since 2010. By specific size, the sweet spots have been homes between 1,500 and 1,999 square feet or between 2,000 and 2,499 square feet. The former represents 27% of home purchases, the latter, 29%. Combined, they account for well over half the homes bought.
Purchase Priorities
So what’s been driving recent decisions to seek a new home? The top considerations are a need to change location, a longing for better home design options — led by interior design — and a wish to transition from renter to homeowner.
As to what’s needed to close the deal, Carmichael referenced the right brain — this, by the way, is not a new concept. She explained that while the left brain focuses on the science of a home purchase decision — facts such as square footage, number of bedrooms, specific features — it’s the emotion of the right brain, the thought that “this just feels right,” that ultimately rules the day. In 2020, that sense of it “just feeling right” often took the form of wanting to move to a more rural community, yet another significant trend likely to be prominent for at least the next two years. Made possible by the increased acceptance of remote employment, it has allowed home buyers to secure more space, gain greater privacy and enjoy a healthier setting — without being tied to the confines of a reasonable commute. A total of 36% of home buyers went this route in 2020, a significant increase over the 22% who did so in 2019. The flipside is that interest in attached homes or those in higher density areas will be out of favor at least through 2022.
As for the top wants for anyone currently in the market to buy a home, they include better interior layout and style, an upgraded lifestyle, more functional space, better energy efficiency, greater affordability, upgraded wellness/healthy-living features and more advanced smart-home technology.
Hot Trends and Features
Carmichael focused on some of these trends, identifying health, wellness and safety features as more important today than ever. This was supported by the finding that over 70% of homeowners would be willing to pay $1,200 for a water filtration system, with a similar percentage not having a problem shelling out $1,000 for air filtration. However, as an aside, she didn’t see touchless technology as having the same growth curve. Her advice: “Don’t do it. It breaks down.” Her logic was that if you are sanitizing anyway, there’s no need for it. Another home feature that’s losing its popularity is solar energy, although for a very different reason. It’s no longer viewed as cost-efficient.
Meanwhile, technology has moved from being a perk to an expectation, especially when it comes to various home security features. However, remote lighting and music are still considered premium offerings. “Let the green in” is another trend that will only grow in popularity, as nature is brought indoors. More vibrant colors throughout the home are also expected to be hot. As Carmichael put it, “Color feeds the soul.” Concurring with findings in the NKBA’s Design Trends 2021 study, she said that modern designs are becoming more popular while traditional is quickly falling out of favor.
Vegetable gardens, chicken coops and living off the grid — the idea of self-sustainability — is another concept Carmichael expects will be hot over the next few years. More nesting and isolation goes hand-in-hand with that concept, as the need to go out to the movies or to dinner, or even to own a car that’s needed for work, have all been decreasing. One change in the home-buying process that has been growing — and which Carmichael suspects will become permanent — are virtual tours of homes, as agents look to better accommodate the schedules and social distancing requests of their prospects.
