The Light: Adapt Your Strategy for Shifting Consumer Sentiment
Consumers have spoken: they believe in homeownership, but many think now is not the right time. Per our recent consumer survey, consumers rank investment potential as the number one reason homeownership is important, yet 66% believe it is currently a bad time to invest.i This means:
- Home purchases are going to be delayed for more than just affordability reasons.
- Rental demand will strengthen, creating tailwinds for the already robust rental market.
What should you do if you are a home builder, rental investor, or building products company?
- Home builders: Shift your marketing a bit toward renters, who are upset by significant rent hikes, and toward emphasizing that new homes have less maintenance than resales. Our survey insights show that maintenance is a top reason renters prefer to rent.
- Rental investors:
- Attract the 58% of renters who are saving to own a home by making the single-family house they want and need a professionally managed rental, including offering future purchase opportunities if inclined.
- Focus on converting the 25% of current homeowners—particularly young ones—who would prefer to rent into renters by providing a home that meets their exact needs.
- Building products companies: Put the tailwind at your back by focusing more on rental demand than you have in the past. For rental homes, emphasize your more durable products.
Home Builders
Owning a home is important to most, but not all—and maintenance is a big reason why: While 88% of homeowners indicate that owning a home is very or somewhat important, only 62% of renters feel the same.ii Maintenance, financial responsibilities, and inflexibility are the biggest reasons why 38% of current renters do not believe homeownership is important. Per our Master Plans and Amenities report, the top two reasons build-to-rent communities appeal to homeowners are 1) community upkeep and 2) having less maintenance responsibilities (including the associated costs).iii
Builders can increase their appeal with low-maintenance offerings. Berkeley at the Canyons in Castle Pines, Colorado, offers low maintenance living with green space maintained by the HOA and snow removal for the sidewalks and alley. Homeowners only need to maintain their side yard, providing an easier transition from rental or city living to homeownership.
Rental Investors
When done right, rentals can offer consumers a different type of return than a traditional investment in terms of home function and proximity to those most important to them.
While investment potential might matter most overall, having ample space for family is the top reason young families value homeownership. Single-family renters who would prefer to own rather than rent report that saving for a down payment is their number one financial hurdle. While saving to purchase, single-family rental can offer renters a family-friendly lifestyle in three key ways, as identified by our survey of 1,100+ single-family rentersiv:
- A private yard
- No one living above or below
- Larger common areas
One in four homeowners would prefer to rent if it allowed them to live in a home that met their exact needs.v This sentiment is highest with young homeowners, a third of whom prioritize a home’s function over ownership. For Young Singles and Couples and Young Families—who are also the most interested in build-to-rent communities—this is primarily based on home size/function requirements.vi
Attracting and meeting the needs of mature home buyers may require a more locational focus. Our research suggests that a growing number of older Americans are prioritizing location over home and Baby Boomers value location most: over half would likely move to live close to family.vii As this cohort considers their next move, trading in homeownership for renting is an ever-growing scenario. Once you have converted them, they are likely to keep renting: 57% of Mature Single and Couple renters have owned a home before, and 68% have no plans to own again.viii
Building Products Companies
Given the current inflationary environment and shifting generational migration trends, demand for single-family rentals, both new and existing, is poised to continue growing. While rental homes live similarly to for-sale homes, their owner’s product needs differ slightly, including:
- Greater focus on durability and ease of cleaning, as the landlord must maintain the homes and needs to ready vacant homes for occupancy as quickly as possible
- Fewer SKUs to streamline repairs and replacements
- A greater investment case for smart home technology that can monitor for damage
Our newly launched Rental Trends Council can help building products companies stay ahead of these shifts. To learn more, please contact the New Home Trends Institute.
i New Home Trends Institute by John Burns Real Estate Consulting, LLC July 2022 survey of 1,347 US homeowners and renters age 18+ with household income of $50,000+.
ii Ibid.
iii New Home Trends Institute by John Burns Real Estate Consulting, LLC February 2022 survey of 1,199 homeowners with household income of $50,000+.
iv New Home Trends Institute by John Burns Real Estate Consulting, LLC April 2021 survey of 1,160 single-family renters with a household budget for rent of $1,000+.
v New Home Trends Institute by John Burns Real Estate Consulting, LLC June 2021 survey of 1,242 homeowners with a net worth of $100,000+ (excluding those who never plan to move).
vi New Home Trends Institute by John Burns Real Estate Consulting, LLC February 2022 survey of 1,199 homeowners with household income of $50,000+.
vii Don Wenner, “America: A Rentership Nation,” Forbes, April 1, 2020, https://www.forbes.com/sites/forbesrealestatecouncil/2020/04/01/america-a-rentership-nation/?sh=605b00882287; New Home Trends Institute by John Burns Real Estate Consulting, LLC June 2021 survey of 1,242 homeowners with a net worth of $100,000+.
viii New Home Trends Institute by John Burns Real Estate Consulting, LLC July 2022 survey of 1,347 US homeowners and renters age 18+ with household income of $50,000+.