Tag Archives: smaller homes

First-Time Home Buyers Want Smaller, Less Expensive Homes

first time home buyerResearch from the National Association of Home Builders (NAHB) shows that first-time home buyers are contributing to an increase in demand for smaller and less expensive new homes. In fact, 41 percent of the 8.4 millions households who bought a home from 2007 to 2009 were first time buyers.

“Builders are increasingly gearing their homes to the needs of first-time buyers, and we expect the trend to continue in the period ahead as the economy begins generating more jobs and more people in their 20s form households,” said Bob Jones, chairman of NAHB and a home builder from Bloomfield Hills, Mich. “New homes are a better match for the needs of the population in general,” Jones said. “Compared to what is typically available in the existing housing stock, they are more energy-efficient, easier to maintain and have designs better suited to today’s lifestyles.”

The market share of first-timers was up from 35 percent in both 2005 and 2007. Although some of the demand was fueled by the initial version of the home buyer tax credit in mid-2008, which was specifically targeted to those buying a home for the first time, the upward trend is expected to continue as children of baby boomers — members of a generation that is larger than their parents’ — move into their household formation years in the period ahead.

Although new housing is significantly more expensive than the existing housing stock, 13 percent of first-time buyers between 2007 and 2009 purchased new homes. By comparison, 17 percent of all the homes sold during that period were new.

Competing with foreclosures and large house price declines in the existing home market, new homes lost ground disproportionately during the housing downturn, falling from a 21 percent share of the homes sold in both 2005 and 2007.

The average market value of a new home purchased was more than $315,000, compared to more than $238,000 for existing homes.

First-time buyers for the two years of the study had an average age of 34, compared to 46 for those trading up.

The average income of first-timers was over $67,000, about 30 percent below the average household income of trade-up buyers of $97,000. About half of the first-time buyers earned less than $60,000.

The household size of both first-time and trade-up buyers has been declining, while single-person households have been on the rise.

First-timers bought homes with an average market value of about $184,000, compared to more than $297,000 for trade-up buyers.

First-time buyers bought homes averaging 1,874 square feet, significantly below the 2,549-square-foot home purchased on average by those trading up. Forty-six percent of first-timers bought homes smaller than 1,500 square feet.

The large majority of first-time buyers — 82 percent — purchased single-family detached homes.

Looking at survey findings on the reasons that buyers chose a particular home, the NAHB study notes that price was the top consideration for 38 percent of the first-time buyers, followed by the design and layout of the home, at 36 percent.

On average, first-time home buyers looked at 15 homes before making their purchase; 63 percent used their savings as the source of the downpayment; and 22 percent of them had no downpayment. That was down from a peak of 25 percent in 2007, reflecting a tightening of credit standards in the mortgage market.

The full report is available at www.nahb.org/homebuyerstudy.

Builder Offers Smaller Sized Homes in McHenry County

smaller homes in McHenry CountyBigger isn’t always better. In fact, smaller is often less expensive and better for the environment. The most recent trend in Green home design is to build smaller more efficient homes.  McHenry County home builder, Gerstad is pleased to announce a new product line designed to meet today’s buyers demands. The custom home builder will now offer smaller, more affordable homes. Designed to help save the buyer money both upfront and over time, these new homes are perfect for anyone who wants a quality, well-built Gerstad home that has been right sized.

The new ranch and two-story plans range from 1,292 to 2,030 square feet and are designed specifically with first-time homebuyers in mind.  Currently these new, more affordable, value enhanced homes are base priced from $180,490 to $204,990.

If downsizing doesn’t appear to be in your family’s future, no worries as the builder will still be offering all of its traditional floorplans. With eight different ranch homes ranging in size from 1,900 to 3,200 square feet and eight two-story homes from 1,900 to 3,200 square feet, buyers are sure to find the perfect home for their family amongst the Gerstad collection.

Gerstad is currently building in three communities throughout McHenry: Liberty Trails, The Trails of Dawson Creek and The Trails of Pheasant Ridge. Each community offers buyers with something unique and special and as with every home that Gerstad builds, homes in these three communities can be customized to fit the buyers needs. Need extra space? A wall removed? It’s no problem when you’re building with Gerstad. We have over 35 years of experience in the home building industry and would love the opportunity to show you what we can do.

For more information about any of our products, homes or communities, please visit the Gerstad Builders website. There you’ll find information about floorplans, pricing and the community.