May 13th, 2014
A recent survey sponsored by Trulia, an online real estate marketplace, found that two out of five Americans would prefer to buy a new home rather than an existing one.
The study, which was conducted by Harris Poll and surveyed 2,048 U.S. adults, showed that 41 percent of respondents strongly or somewhat preferred to purchase a newly constructed property. Conversely, only 21 percent said they strongly or somewhat preferred an existing home, and the remaining 38 percent had no preference.
Despite the apparent interest in newly built homes, many were not willing to pay the additional 20 percent on average for a new property. Of respondents who wanted a new home, less than half – 46 percent – said they’d be willing to pay at least 20 percent more for a newly built home of similar location and size as an existing home.
“Twice as many people prefer newly built homes to existing homes, but barriers often stand in the way of buying a new home,” said Jed Kolko, chief economist at Trulia. “Most people who say they strongly prefer a new home aren’t willing to pay the premium, and many regions of the country have little single-family construction.”
Slow new residential construction hinders buyers
Indeed, the slower pace of housing starts and completed single-family homes has contributed to the challenges facing homebuyers. In March, for example, the U.S. Census Bureau noted a decline month over month for single-family housing completions. Even so, there are some metro areas that have new homes available. Here are the top five housing markets with the most single-family construction:
On the opposite end of the ranking, the New York metro area had the lowest rate of new single-family construction, at 0.4 new single-family units permitted in 2013, per 1,000 existing housing units. The Big Apple was followed by San Francisco (0.8), Detroit (1.0), Los Angeles (1.1) and New Haven, Connecticut (1.3). Kolko said that as the housing recovery continues, the inventory of new homes should expand nationally.
Reasons for buying a new home
In addition to finding that newly constructed homes are more favored, Trulia explored the reasons people want to purchase a new property. The data was broken down by total responses and the responses of only those who strongly preferred a new home. However, the ranking for the top reasons to buy a new home remained consistent among both lists. Here are the results:
Reasons for buying an existing home
Among total respondents and those who strongly preferred an existing home, having a home with traditional features was a top reason for purchasing a resale property, but it only came in at No. 1 among the latter group. Lower costs were the top choice among all respondents, and the ability to live in an established neighborhood or near other older homes was also favored.
Kolko said that there is a middle ground for those homebuyers who can’t decide between the two options.
“For many people, the best of all worlds might be a newly built home in an older neighborhood,” he said.