Generational trends are impacting nearly every industry—such is the case for our homes. Here’s the question at hand: If the Baby Boomers are not downsizing from the big homes and Millennials and younger buyers want to buy a home, where are we going to find the land? And how will we ultimately make these structures more sustainable.
Consider these trends. The 2021 Home Buyer and Sellers Generational Trends Report from the National Assn. of Realtors, shows that Baby Boomers make up the largest share of sellers at 43% and when selling they trade for a home that has a difference of less than 100 sq.ft., essentially trading a similar-sized home. Meanwhile Millennial buyers continue to make up the largest share of homebuyers at 37%.
We know the housing industry is facing a number of challenges—the lumber shortage, which I have discussed—but also the land shortage. The shortage of lots is something that has been a problem since even before the pandemic hit. In January 2020, a survey of single-family builders revealed 58% said the supply of lots was low (40%) or very low (18%), according to NAHB (National Assn. of Home Builders).
Amid all these shortages, there is also the question of sustainability and how we are going to build or renovate homes to be more sustainable for future generations. How are we going to get baby boomers to look to get their homes more sustainable?
Let’s look at some of the trends. For Baby Boomers, heating and cooling costs and windows, doors, and siding ranged highest among environmentally friendly features considered very important. Next came energy-efficient lighting and energy-efficient appliances. Solar panels ranked very low among all the generations, according to the 2021 Home Buyer and Sellers Generational Trends Report.
Interestingly, the What Home Buyers Really Want, 2021 Edition, from NAHB puts a different spin on this. The top five most wanted technology features in a home deal with either energy efficiency or home security. Buyers want a programmable thermostat, security cameras, video doorbell, wireless home security system, and a multi-zone HVAC (heating, ventilation, and air conditioning) system. When looking specifically at “green” features, the top five most wanted are ENERGY STAR windows, ENERGY STAR appliances, efficient lighting, ENERGY STAR rating for whole home, and triple pane insulating glass windows.
Here is the challenge. While 78% of buyers report being concerned about the impact building their home has on the environment, only 15% are actually willing to pay more for a home described as “environment friendly.” Therein lies the rub. But there is a catch. Buyers are willing to pay extra for a home if they understand it will ultimately lead to annual savings in utility costs. In fact, 57% are willing to pay $5,000 or more, on top of the price of the home, in order to save $1,000 a year in utilities.
The reality is green homes amount to a lot more than just dollars and cents. Ultimately, they support our environmental, social, and economic wellbeing. While LEED (Leadership in Energy and Environmental Design) homes do deliver at least 15% in energy savings compared to homes built to code and 20% in water savings, the USGBC (U.S. Green Building Council) points to other benefits including cleaner indoor air and prioritizing the use of materials that promote health and enhance resilience.
Let’s look at one specific area that has been top of mind for many lately: air quality. According to the U.S. EPA (Environmental Protection Agency), concentrations of some pollutants are two to five times higher indoors than outdoors. LEED homes maximize indoor fresh air and prioritize strategies and materials that minimize exposure to airborne toxins and pollutants that can negatively impact human health. The question now becomes: Are we willing to pay for it? And the answer could vary by generation.
Generational trends are impacting nearly every vertical market—and that is certainly the case with our homes and communities. Will the younger generations help spur the move to these more sustainable homes? Easier said than done, right, especially if there isn’t the land or materials available.
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