Four Millennials Talk New Construction (and What Home Builders Can Take from It)
July 9, 2020
One key housing trend we’ve seen play out at the HomeSphere office is millennials buying new construction homes. In fact, several millennial team members purchased a new home in the past year (if not the past few months!), and three of them are first-time buyers.
First off, congrats to the biggest buying force in homebuying. It’s great to see this age group active in the market. Second, we couldn’t keep their perspectives to ourselves when a huge part of our audience is home builders.
So, today, we’re sharing their insights on buying new construction so you can hear straight from them on what they looked for, what they compromised on and more. We hope it helps you in future sales and marketing initiatives.
As a general note, all buyers featured in this article purchased a home in the suburbs surrounding Denver which has a reliably competitive housing market.
Meet Raquel, a first-time buyer looking for a good price
Reason for buying home: I was previously renting a room from my aunt and needed a place of my own. Price was the biggest issue for me.
Length of home search: About a year.
Type of home purchased: Townhome.
Why new vs. existing? I looked at existing homes in addition to the one I purchased and there were quite a few I liked, but prices were always an issue. I was kind of shocked at how expensive some homes were given their condition. They wouldn’t have AC, or there was no garage, yet the prices were still high. Or, there’d be communities that were priced great, but then HOA fees would get you. I was able to find a great affordable housing program with Thrive Home Builders. When I compared what it’d cost to purchase new and the work I’d need to do on the existing homes, the cost evened out.
Benefits of a new home: I loved that I didn’t have to worry about holes in the walls or having to paint. It was just ready for move-in.
Biggest compromise: I had to expand my location search, but I ended up falling in love with the area anyway.
Thoughts on the process: I was pretty nervous because I didn’t know what to expect, but it was easier than I thought it’d be. I purchased the home pre-coronavirus, but ended up moving right in the middle of April, so there was definitely stress there. But, my home builder made it easy and I ended up taking measures like signing in my car.
Meet Natasha, a move-up buyer looking for more space
Reason for buying home: I already owned a townhome but I needed something bigger, particularly for my daughter, who’s 6. I wanted a larger bedroom for her and a yard that she could play in. I also really wanted a two-car garage.
Length of home search: I was looking casually for awhile, and just ended up falling in love with my home. (My mom’s a real estate agent, so she’d always send me listings the moment they came up.)
Type of home purchased: Single family.
Why new vs. existing? I wasn’t necessarily looking for a new build but I wanted to move into a single-family home. When it came to the existing homes I found, they were always either under contract, or they were too small or needed too much work. I raised my budget a little and found a new home constructed by Lennar that I absolutely loved. It was also in the location I wanted to be, and the cost was comparable to what it would’ve been fixing up an old home.
Benefits of a new home: It’s yours — no one has lived in it before. You can also make the yard entirely your own. And, you don’t have to fix anything or redo anything.
Biggest compromise: I purchased a new build that was already constructed so I wasn’t able to customize it as much, but I did like the way it came. One con is related to making the yard my own — I’ll have to put my own fence in and grass, which will obviously take time, work and money. But, ultimately, I decided it was worth it.
Thoughts on the process: I was a little scared because I’d never had to deal with a new build before, but the process was really smooth. I closed in June, so like Raquel, I was moving during the pandemic which was stressful but ended up working out.
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Meet Liz, a first-time buyer with post-pandemic blues
Reason for buying home: Buying a home has been on my mind for some time. But, after living alone in a small apartment in Denver during the pandemic, I’ve been feeling what a lot of people are feeling — the desire for more space. With mortgage rates at record lows and prices not getting cheaper in this high-priced Colorado market, I knew now was the right time.
Length of home search: I’ve been looking on and off for about a year, but once I found the community I was interested in, built by Oakwood Homes, the process was incredibly quick.
Type of home purchased: Paired home.
Why new vs. existing? I looked at both new and existing homes, but I knew I didn’t want to buy a money pit and everyone I’ve known who’s purchased an old home has had some issue come up. I also liked that my home is located in a master-planned community with trails, parks, a rec center and even a coffeehouse. It’s good for resale value. My new home is located outside Denver because I only would’ve been able to afford condos with no outdoor space in the city's existing market. For the same amount of money, I was able to buy a 1,600 square-foot home.
Benefits of a new home: I have more control in customizing my home, and it’s designed to be more energy-efficient than older homes so I’ll have lower energy costs. It’s also convenient that everything is new and baked in with the price. I opted to upgrade my design package which allowed me to purchase general upgrades for the whole house without having to individually pick.
Biggest compromise: Having to wait. I made this life-changing decision and now I’ll have to wait for six months, but I think it’ll be cool to see it get built.
Thoughts on the process: It was nerve-wracking and scary, but once I signed the paperwork, I felt a lot more comfortable. I felt some pressure of needing “to jump now,” and even since I signed, the base price of the lot has already gone up, but it was easier than I expected. I also appreciated that the sales rep I worked with walked me through everything. They gave me a “road to getting a new house” handout and it acknowledged that there’s always a buyer’s remorse period, which I definitely felt. But I’ve worked in the residential construction industry for 15 years and I have faith in the market.
Meet Rico, a first-time buyer wanting multigenerational space
Reason for buying home: I wanted more space and to find a place where my wife and I could start a family. We also needed a place large enough to live with my wife’s parents, while still maintaining separate spaces. And, I also wanted a garage.
Length of home search: We started thinking about buying a home about a year-and-a-half ago.
Type of home purchased: Townhome.
Why new vs. existing? We initially looked at older homes but decided new would be better based on our needs. Less work would be involved and, when it came down to it, there weren’t that many options available to even look at in the older market. We would’ve had to compromise on a garage or square footage and we really wanted space to entertain, cook, grow with kids, and etc. We ended up going with a townhome from BLVD Builders.
Benefits of a new home: It’s new so any issues should be far less dire than an older home, and you can customize it and roll it all into your loan. Our place also has great basement space so we could design and construct a living space for my wife’s parents. We were able to customize our whole place and picked out options at the builder’s design center that fit our style and budget. For instance, we were able to get taller cabinets for more storage.
Biggest compromise: I wanted a yard but that was something I had to compromise on. We’ll also have shared walls, but my wife actually wanted a townhome specifically for the lower maintenance. The waiting period has also been hard.
Thoughts on the process: The process itself was very easy. My wife was out of town when I first went to meet with the builder, so we had her on video conference and she was able to digitally sign for her part. While there was sometimes back and forth, it was all streamlined.
We noticed some common threads through each of the responses that also match up with outside research on millennial homebuying.
- The appeal of move-in ready can’t be overstated. Millennials, in general, aren’t looking to complete costly and time-consuming reno projects — and certainly not in markets where homes are already priced high.
- Homebuyers are willing to do the math on cost. Responses indicated everyone weighed the true cost of new versus existing, with new coming out on top. In less competitive markets, existing homes could be objectively cheaper, but you can help homebuyers understand why there’s less cost risk involved in purchasing new.
- Location isn't a dealbreaker. As much as everyone touts “location, location, location,” it's something buyers are willing to compromise on as long as the home they’re moving to meets their needs. And we've got to say, the suburbs are happening right now.
- More space is paramount. The desire for more storage space has been trending for some time, and now more space for living is also a hot topic thanks to people feeling stuck at home. Any ability to dive into this trend — like floorplans with offices, separate living areas and more — likely won’t go unnoticed by buyers.
- Customization is great, and so are packages that require less input. A big benefit of new homes is the ability to customize. It’s exciting for homebuyers and helps them feel at home in their new space. If you don’t already have an online design center, now’s the time to consider one. However, it’s also good to remember that not all homebuyers want to go room by room and add unique touches — in fact, that might be a little overwhelming. So, predetermined design packages are also great to promote when possible.
- Buying a house is scary. Make sure you’re adequately guiding buyers through the process. We like how upfront Liz’s home builder was about all of it, including that there’s generally a buyer’s remorse period. It’s easy to think honesty sounds negative or will scare someone away, but it can actually be really refreshing and helpful.
Let us know anything we missed in the comments!