A community in North Carolina’s Raleigh-Durham area featuring Garman Homes’ single-family detached homes.

Carol Ruiz is principal at NewGround PR & Marketing and an 18-year member of ULI, currently serving on the Residential Neighborhood Development Product Council (Blue Flight).

ULI MEMBER–ONLY CONTENT: While COVID-19 has caused much uncertainty in 2020, it has brought clarity to one aspect of life: where we call home has never been more important than it is right now. With more Americans working, taking classes online, and, of course, quarantining in their homes, one study reveals the changing needs and preferences of owners and renters alike.

According to data from the National Association of Realtors, U.S. pending home sales hit a two-year high in July.

The America at Home Study, hosted online April 23–30, 2020, leverages a nationally representative sample of 3,001 consumers 25 to 74 years of age with household incomes of more than $50,000. Spearheaded by marketing expert Teri Slavik-Tsuyuki, consumer strategist Belinda Sward, and architect Nancy Keenan, the study reveals Americans’ desire for home purchases, how they feel about and live in their homes, and what changes they would like as a direct result of sheltering in place.

Capturing consumer sentiment during the initial wave of COVID-driven, countrywide stay-at-home orders, this study provides an invaluable baseline of data to evaluate the types and degree of changes that people are making at home and what they are looking for in a new home. By studying housing preferences and community and lifestyle features from the buyer’s point of view, homebuilders and community developers can respond to this shifting market and create new ways to meet the new form and force of demand of those who have sheltered in place. Understanding differences by and within generations—versus stereotypical assumptions such as all millennials want the same thing or all urban dwellers now want to move to the suburbs, or other broad generalizations—will help builders understand and meet the new home demand emerging out of the pandemic.

Supply and Demand

Conventional wisdom held that the COVID-caused economic slump would extend to the housing industry. After all, rising unemployment and decreasing consumer confidence does not bode well for a sector based on the biggest consumer purchase.

The America at Home Study proves differently though, shedding light on how Americans feel about and live in their homes, as well as their attitudes toward entering the housing market, offering hope and a new path forward for the industry at large. Forty-six percent of respondents renting today said that they are more inclined to want to buy a home now. This finding could equate to 7.4 million new households based on Herfindahl-Hirschman Index HHI and age criteria as compared with the U.S. Census. From the renting population, 53 percent of millennials (25 to 34 years old) and 47 percent of “older millennials/younger gen X” (35 to 44 years old) surveyed now want to buy a home.

“We are calling it ‘the great American move.’ As a result of COVID and the ability for many to work from home more permanently now, greater numbers of people are moving out of denser and more expensive markets into more suburban and what may have been secondary locations, driving demand in markets like Boise, Idaho,” says Ken Perlman, managing principal at John Burns Real Estate Consulting and a real estate market intelligence expert.

The downside, however, is supply. Perlman reports that the average number of units of inventory per neighborhood across the United States has decreased more than 21 percent year over year, with Texas markets seeing a 35 percent plunge. Despite the downward new-home inventory trend, which includes a 5 percent decrease in the number of active communities year over year, new home sales in June jumped 55 percent versus 2019 figures, he adds.

“Millennial renters wanting to own and boomer homeowners motivated to buy a different home are two groups for homebuilders to pay close attention to. The study revealed that more than a third of baby boomers 55-plus want to move out of their current home sooner than planned,” says Slavik-Tsuyuki, principal at tst ink LLC.

This demographic also has the highest percentage (50 percent) with no change in plans, meaning those already intending to move still are. Millennials, who represent the highest proportion of renters wanting to buy (53 percent more inclined to buy due to COVID), favor single-family detached (75 percent) over all other product types. Overall, the increased desire among current renters to buy a home was strongest among multi-generational families (60 percent), single parents (53 percent), couples with kids (51 percent), and couples (47 percent).

The “older millennials/younger gen X” renter segment, who are now more inclined to own rather than rent, was actually the group most willing to make tradeoffs and compromises in order to increase their ability to buy a home. When it comes to the “urban versus rural” living question, household income—rather than demographics—is the greater predictor. Not surprisingly, renters with lower incomes are more inclined to prefer rural locations and those with higher incomes prefer urban ones, opening up post-COVID opportunities for new urban design that addresses lifestyle needs for more-affluent buyers.

Of the consumer population that planned to continue renting, the top housing type was single-family detached homes at 40 percent overall, a living arrangement preferred by 60 percent of couples with kids, 55 percent of singles with kids, and 75 percent of multi-generational families. Demand for build-for-rent single-family detached homes remains strong, both in terms of volume and product range to serve the different household types.

Above and below: In the short term, buyers may be interested in outdoor amenities such as walking trails and other non-traditional workout spaces. (Photos courtesy of Rancho Mission Viejo)

Home Health and Wellness

Comforts help make a house a home and turn a structure into one’s personalized sanctuary. During this pandemic year, comfort has increasingly meant peace of mind. Residents have health and wellness on their minds now more than ever.

The top three things that “home” means to both renters and owners is a safe place (91 percent), comfort (85 percent), and family (84 percent), according to the America at Home Study. Residents are on high alert regarding their household’s well-being and their spatial needs have been broadened; these things are reflected in the following priorities and preferences in new homes: hygiene, wellness and space, and adaptability/flexibility.

“Hygiene and control of their environments are top of mind for renters,” says Sward, founder and chief strategist at Strategic Solutions Alliance. “At 77 percent, they had the highest incidence of saying they are disinfecting things more and high preference for germ-resistant countertops and flooring. That’s something we need to pay attention to.”

There is nothing like a pandemic to dial up urgency and turn evolving consumer attitudes and trends into more pressing needs. Buyers want better, more accommodating features in their homes and are now even more willing to pay for them. The America at Home Study found that more than 50 percent of respondents want germ-resistant countertops and flooring; more storage for food and water; touch-free faucets, appliances, and smart toilets; and better-equipped kitchens for cooking.

“People don’t want to go back to ‘business as usual’ or ‘normal.’ The pandemic has brought forth a deep desire for change,” says Keenan, president and CEO of DAHLIN Group. “As industry leaders, we have a duty to take these responses and put them into practice, starting by focusing on sustainability as it intersects with hygiene, health, and safety.”

Homeowner demand for greater technological capability, energy efficiency, and spatial flexibility has been a broader, more established consumer trend, of course. More than 30 percent of those surveyed now want touchless entry to home, a home office for more than one person, and structural adaptability, including flexible walls.

Some priorities are non-negotiable, such as health and safety, as Keenan states. There are several tradeoffs, however, that millennial homebuyers are willing to make to own a home. According to the study, access to open space via a balcony, porch, deck, or patio versus having a yard (57 percent) topped the list, followed by a different, less expensive location (53 percent), smaller yard size (45 percent), fewer features or upgrades (44 percent), the ability to rent out a room or an apartment in the home with a separate entry (42 percent), and smaller/no garage and attached home type (both at 39 percent).

The America at Home Study offers homebuilders and developers the opportunity to gain even greater generational insights and perspectives. Millennials are the least satisfied with their current home design. More than any other demographic cohort, they are using rooms for multiple purposes, creating spaces for more than one home office, and upgrading their technology. This consumer segment is most interested in germ-resistant countertops and flooring, more advanced kitchens, a home gym, and overall spatial flexibility.

“The biggest changes our buyers say they would make if they could, include added soundproofing and more electrical outlets,” says Alaina Money-Garman, cofounder and CEO of Garman Homes and Fresh Paint by Garman Homes. “The hard-surface flooring in our homes makes it really loud when you are trying to work and do school from home and have multiple Zoom calls. The simple solution of adding more electrical outlets allows people the flexibility to create workspaces or school spaces anywhere.”

Boomers tend to be the most satisfied with their current homes. According to the study, they most valued health—germ-resistant countertops and flooring ranked number one with this group—greater technology and energy efficiency, and more roomy kitchens and storage space.

“The good thing is green building standards are now so close to building code that our buyers have told us the efficiency of their homes makes their utility bills low, even with all this time at home,” Money-Garman adds.

Community Health and Wellness

The America at Home Study signals the need for a paradigm shift in other ways. Much of the homebuilding industry has been predicated on “move-up” buyers, but the 45- to 54-year-old generation X consumer segment—the traditional move-up buyer—is no longer the most motivated to buy. Although 23 percent of gen X current homeowners said that they are now more motivated to move than before the pandemic, homebuilders can no longer rely on that tendency from that core buyer segment.

The most likely replacement would be millennials, with 39 percent of millennial owners saying they are now more motivated to move, but they typically do not demand the same amenities, such as clubhouses. Not surprisingly, preferences increasingly incorporate precautions regarding community amenities in the COVID era. According to the study, the most desired ones are large parks with open fields and green space (52 percent); trails (47 percent); open-air gathering spots such as pavilions and picnic and barbecue areas (40 percent); small neighborhood parks with seating areas and a playground (39 percent); and health and wellness facilities (38 percent).

An expanding affinity for such amenities will spur an even bigger focus on places such as Rancho Mission Viejo, a 23,000-acre (9,300 ha) award-winning master-planned community in south Orange County, California. “There are miles of trails, thousands of acres of open space and numerous amenities that provide open-air access and opportunities to exercise, refresh, and rejuvenate—especially in these unusual times,” says Paul Johnson, executive vice president of community development of the family-owned ranching, farming, and real estate development company.

Located adjacent to the Orlando International Airport, Lake Nona offers a unique live/work/play mix, but residents during the pandemic are especially appreciative of its multiple community parks, 44 miles (71 km) of trails, and 1,000-plus acres (400-plus ha) of lakes and waterways. In fact, 40 percent of Lake Nona has been reserved for open green space. Walsh, which could deliver more than 15,000 homes to the Fort Worth, Texas, area, will have 2,300 acres (931 ha) of open space in the master plan, including more than 32 miles (51 km) of hiking and biking trails.

“When we talk about amenities—and by definition those are things that people share—we’ll likely think about simpler, less programmed outdoor spaces,” says Kathleen Cecilian, CEO of Cecilian Worldwide and ULI Foundation governor, who cites Central Park as a prime example with its many different individual uses. “Simpler is better, and nature is a curative. Anything that puts people in nature is a benefit when it comes to amenities.”

The COVID-19 pandemic is quite a sudden change, especially when compared with broad consumer trends and lengthy economic cycles. How do developers balance the quick response with the long-term effort required for envisioning and designing community amenities? The America at Home Study indicates that every community element related to outdoor space ranked higher than the capital-intensive built environment.

Developers incorporating safety, health, and wellness into residential offerings should add or expand on open outdoor space features, from large parks with green spaces for gatherings to smaller neighborhood plazas, playgrounds, and pavilions, to picnic and barbecue areas. Elements that facilitate motion, connectivity, and even competition, such as sports courts and bike trails, support the consumer cause. Developers should get intentional about their trails and open space design and create spaces for outdoor events and activities, outdoor fitness experiences, and new ways to gather with others. There will be a number of creative solutions to come.

“The ‘Live. Work. Play.’ adage could now be turned into ‘Live healthy. Work from home. Play outside,’” says Tim Sullivan, senior managing principal at Meyers Research. 

The new consumer emphasis from the America at Home Study is the desire for the community to demonstrate controlled safety, sanitization, and maintenance—just as we now see in restaurants. If that and the multi-trillion-dollar health and wellness industries are maximizing their efforts to ensure safe, sanitized, and maintained environments, then it should be of little surprise that those priorities for residential amenities drew a third overall ranking in the study (45 percent).

Closing

The COVID-19 pandemic has done something hard to imagine before 2020: It has made the concept of home even more central to people’s lives. The America at Home Study provides insights into what home means to people while living during a pandemic, the impacts of which may be lasting.

How deep and wide will those effects be? One way to know is to build a concept home and invite homebuyers to experience the survey insights in real life in the residence. The concept home facilitates “real-time R&D,” an unusual thing in the homebuilding industry. Take a foundational study revealing Americans’ desire for home purchases, how they feel about and live in their homes, and what changes they would like as a direct result of sheltering in place, and add a live laboratory to observe the design and build implications of this unique time.

Starting next month, the team behind the study will mine the data even deeper and hold design charrettes leading to the design and construction of a concept home. DAHLIN Group will lead the planning and architecture of the home, and North Carolina–based Garman Homes will build it. The study itself will be repeated and expanded this fall to either confirm or refute whether the insights about how Americans want to live will last well beyond the pandemic.

CAROL RUIZ is principal at NewGround PR & Marketing and a member of the Residential Neighborhood Development Product Council (Blue Flight).