Nick Lehnert – Home Builder and Buyer Trends

Time to Build

July 2, 2015

Builders need to catch blossoming trends early, since it often takes two years to go from conceptual drawings to homeowner move-in. That’s one big reason why the programming each year at PCBC (The Pacific Coast Builder’s Conference) focuses on the early gestation of new trends. Here are 10 worth watching, based on this year’s seminars.

Renters may fuel home sales
A strange phenomenon is afoot in the housing market. Even as the new home market recovers, the rental population is increasing. Some builders are taking advantage of the trend with build-to-rent programs. They build and sell homes to a third party that rents them to people who can’t qualify for a mortgage. One of those third parties is Waypoint/Starwood, the biggest player in the single-family detached rental market. Doug Brien, co-CEO of the company, has already bought more than 500 homes from 12 builders and rented them back to families.

Outdoor living is moving upstairs
It’s not enough to merge great rooms with back porches using big sliding door systems. Now homeowners are asking for a similar treatment upstairs, merging master bedrooms with large decks and porches. The design approach sells homes, said David Kosco, director of design for Bassenian Lagoni Architects, who works with builders throughout the country. When builders incorporate indoor/outdoor spaces into their homes, “it puts them ahead of the market,” he said. See the example at the top of this post.

Appeal to many not a few
The biggest change in business, brought on by demographic change, may be the need to cater to multiple buyer segments simultaneously. Builders previously could afford to focus on baby boomers, the pig in the python, and pick off the others as sidelines, said J. Walker Smith, chairman, The Futures Company. Now builders need to find ways to reach “parallel silos,” namely millenials moving into their home-buying years and family-oriented Generation X households. “It’s a very different marketplace.”

Big growth predicted for Internet of things
Building product companies that make smart products trotted out some impressive graphs from market research companies showing meteoric growth in smart products. John Webster, director of new residential construction for Lennox, which makes a thermostat that you can access through an app on your phone or computer, expects wi-fi thermostat sales to double in two years. Eventually, he predicted, “anything that costs more than $100 is going to be smart product.” Below is an iPad-like thermostat from Lennox.

Homes may eventually operate themselves
Eventually, homes may resemble autonomous cars. We are relinquishing our control over our cars and our homes,” said Colleen Sharp, vice president of the Futures Company. “We get in the car, tell it where we want it to go, and sit back and enjoy the ride…. The same thing is happening in the home. The Internet of Things is happening faster than the Internet of people. Diminishing consumer control puts marketers back in control.”

Wet bars, like old ties, have come back in fashionable
Here’s some bad news for homeowners who ripped wet bars out of homes built in the 1950s and 1960s. They are staging a comeback. Builders and designers are putting them back into new homes as they try to appeal to aging boomers who, like their parents before them, have discovered the pleasure of alcohol. “Alcohol is big for this consumer,” said Mollie Carmichael, principal with John Burns Real Estate Consulting, during a discussion of baby boomer hot buttons. The wet bar in Plan 497-46, shown below, doubles as a butler’s pantry between the kitchen and the dining room.

Transitional architectural styles grab attention
The trend toward contemporary home designs has been well documented. Now demand is growing for so-called transitional architectural styles that bridge the old with the new. Nick Lehnert, executive director of KTGY, highlighted K. Hovnanian’s new K Line of homes designed by Piet Boon that blend contemporary and traditional elements. Demand for the treatment is spreading. “We just had a request for a transitional Hill Country style,” he said.

Age-targeted design is popping up everywhere
Most surveys show most baby boomers aren’t interested in moving to an age-restricted community such as Sun City. But they are still attracted to home designs that reflect their needs for features such as first-floor masters, party space, home offices. Michael Woodley of the Woodley Architectural Group showed plans for Lucent by Shea Homes, a series of six-unit condo buildings. Elevators, single-story floor plans, and close proximity to San Diego cultural activities, make it ideal for aging boomers.

Millenials eventually move to the suburbs
“It’s an urban myth that [millenials] will always live in urban apartments,” said Colleen Sharp, vice president with The Futures Group. “It’s going to change.” Sharp presented data showing that older millennial households, especially ones with children, are already moving to the suburbs for better schools and bigger yards, just as previous generations did. And in reality, the majority of millenials don’t live in downtown settings anyway. Sharp pointed to an Urban Land Institute survey showing that only 37 percent of millenials described themselves as “city people.” Far fewer, only 13 percent, actually live in downtown city centers.

There’s such a thing as kitchen islands that are too big
The trend toward bigger kitchen islands has been duly noted. They have become a fixture in new homes as owners use them to entertain, prepare elaborate meals, and feed their kids breakfast. But, as Amy Albert, editor-in-chief of Professional Builder magazine pointed out, islands can be too big. “It’s hard to imagine reaching the middle to clean some of them….It may be better to do two smaller islands than one big one.”