What if the housing affordability crisis isn’t only about the price on the listing? That’s just one compelling question raised by new research from Green Builder Media’s COGNITION Smart Data portal. Our new ebook, Full Cost, Not First Cost, Will Unlock Future Housing Affordability, digs into what renters, homeowners and builders are telling us about the economics of housing—and it reveals a market that may be ready for a very different kind of home.
The dream of homeownership hasn’t disappeared. Half of renters surveyed say they expect to purchase a home in the future, and another 11.7% say they probably will. But there’s an enormous obstacle: 41.7% of consumers surveyed say they realistically need a home priced below $200,000.
Something has to give—and our data suggests buyers are willing to give quite a bit:
That last point matters because the purchase price is only the beginning. Ongoing expenses like insurance. property taxes, maintenance, HOA fees, heating and cooling, and electricity increasingly determine whether a household can actually afford the home it owns.
Our research finds that 41.5% of homeowners say wages have increased less than home expenses, while substantial shares report increases in maintenance, property taxes, insurance and utilities.
That changes the affordability conversation. Instead of asking only, “How cheaply can we build this house?” the industry can ask a more useful question: “How can someone afford to live in it?”
The data points toward energy efficiency, efficient layouts, durable materials and right-sized homes as important pieces of that equation because in an affordability-constrained market, they can become part of the financial proposition of the home itself.
And there is potentially a disconnect between builders and the market, which creates opportunity for companies that are paying attention. The report finds differences between what consumers say they can afford and what builders believe their buyers are targeting.
The message emerging from the data is surprisingly hopeful: Buyers haven't necessarily given up on homeownership. They're looking for a housing product that can work with their monthly budget. This could mean smaller, more efficient, more durable, in a different location, or even somewhat more expensive upfront if the total monthly cost makes sense.
The companies that understand that shift have an opportunity to redefine what an “affordable home” actually means.
Download the new COGNITION Smart Data ebook, Full Cost, Not First Cost, Will Unlock Future Housing Affordability, to explore the data and what it means for your home building business.