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HOUSING SCENE

Can't always get what you want, but some buyers come close

November 11, 2007|Lew Sichelman | United Feature Syndicate

WASHINGTON -- Are existing-home buyers a different breed? Do they have the same needs as those who buy brand-new houses right off the showroom floor? Do they have the same desires?

"In terms of what they are looking for, new- and existing-home buyers are pretty similar," said Paul Bishop, director of the National Assn. of Realtors' Center for Real Estate Research, who has produced a 70-page report profiling the preferences of both groups. "Where the differences play out is in what they end up with."

What existing-home buyers typically end up with is a smaller house with fewer of the features they said they wanted. In other words, buyers of new homes are more likely to purchase a house closer to their ideal home than buyers of previously owned homes.

That's not to say existing-home buyers are not satisfied with what they get. Almost across the board, they are. But for the most part, they didn't end up with exactly what they were looking for, the survey found.

For example, 33% of the existing-home buyers queried in NAR's study didn't get as large a house as they wanted. Some 30% didn't end up with as many bedrooms or bathrooms, while 50% didn't get as much storage and 44% didn't get as big a kitchen or as many closets.

New-home buyers fell short of their goals too. Just not by as much. Twenty-nine percent didn't get as large a home as they hoped for. But only 19% settled for fewer bedrooms and 13% ended up with fewer bathrooms, and 27% sought a larger kitchen than they ended up with.

According to Gopal Ahluwahlia, director of research at the National Assn. of Home Builders, the reason for these differences is simple: money. New-home buyers tend to earn more of it.

The median annual income of new-home buyers is $75,000 versus $63,000 for those who buy used houses, according to the latest figures from the Census Bureau. New-home buyers are slightly older and more likely to be trading up from a first or second home, so they tend to earn more and have built up equity in their previous home or homes to use as cash for their new places.

The median age of a new-home buyer is 41 compared with 39 for buyers of previously owned homes, according to government figures. Despite these differences, home buyers are like car buyers -- some prefer the newest models, and others would rather let someone else work out the kinks before taking over.

Indeed, says Ahluwahlia of the builders group, ask people what they want and half say new and half say used. But ask them what they want inside their houses, new or used, and they'll tell you they want everything and anything.

"When you ask what they want in a house, they'll tell you they want a palace," Ahluwahlia says. "But can they afford it? No, of course not. That's why for every new house that is sold, five existing homes change hands."

Interestingly, the top three things on the wish lists of folks who buy previously owned homes are practically a given for new-home buyers.

The feature ranked most important by existing-home buyers is central air-conditioning; second is a garage with two or more spaces; and third, a walk-in closet in the master bedroom. But in the new-home sector, all three of these are "gimmies."

That's why new-home buyers "don't think about these things as 'gotta have' items," says Bishop of the Realtors organization. "In the new-home market, they are always there. But that's not so in the existing-home sector."

Where existing-home buyers often have it over those who buy their homes right off the production line is location. After all, homes are not cars. You can't drive them to where you want to park them. Buyers of previously owned homes in the NAR survey were more likely to end up closer to schools, shopping, play areas, work, cultural activities, public transportation and golf courses than those who bought a new house.

On almost all other preferences, though, new-home buyers were more likely to meet their goals. They got more of the rooms they wanted, more of the interior and exterior features, and most of the natural features.

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Lew Sichelman can be reached at lsichelman@aol.com.

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