New-home buyers in the West are purchasing larger homes and prices are creeping ever higher, due in part to low inventories, according to a recent survey of new-home buyers in four Western states. Nonetheless, new-home sales across the country are setting new records.

Sales of new single-family homes surged 8.1 percent to a record high seasonally adjusted rate of 1.03 million units in May, according to the Commerce Department. While the Northeast realized the largest gains, the West continues to see single-digit increases.

"Low interest rates and the solid investment potential of homes are encouraging more buyers than ever to go forward with a new home purchase," said Gary Garczynski, president of the National Association of Homebuilders.

In addition to the housing market providing muscle to the economy, owners spend an average of $8,900 to furnish, decorate, and make improvements in the first year following a new-home purchase.

In the recently released VISION 2002 survey - taken from more than 1,300 new-home buyers in Arizona, California, Colorado, and Nevada - new-home buying patterns and preferences were revealed. The survey, conducted by National Survey Systems, Color Design Art, and the Meyers Group, a residential real estate research company, was released at this year's Pacific Coast Builders Conference, a gathering of nearly 24,000 home building professionals held recently in San Francisco.

One overriding theme drawn from the survey is that despite the strong sales in the West and throughout the country, affordable homes continue to move out of reach for an increasing number of families.

In California only 29 percent of households can afford the median-priced home; in Phoenix 58 percent; and in Las Vegas some 48 percent can pay for a median-priced home.

"The median price of new homes is up almost 10 percent from 2000," said Las Vegas broker George Durkin.

The resulting equity increases, particularly in California, are offsetting the affordability crunch, the survey says. Short-term, that means houses get larger and prices stay high; long-term, it means more Californians may be going out of state to find affordable homes.

Some 39 percent of the survey respondents said they were motivated to purchase a new home because they wanted or needed more space. Among first move-up buyers, a full 60 percent said they wanted or needed a bigger home.

The NAHB also sees that trend.

"Every age group wants a little larger home even though the family size is shrinking," said Gopal Ahluwalia, NAHB's director of forecasting, at the International Builders Show, held earlier this year.

The average size of a new home has mushroomed from 1,500 square feet in 1970 to 2,330 square feet in 2001, according to the NAHB.

Many - 52 percent - said the most influential room in the house is the kitchen. The family room runs a close second, followed by the master bedroom and living room.

Other industry professionals also discussed that trend earlier this year.

"In 2002 we don't want homes that impress friends as much as we want homes that comfort our families," said Joan McCloskey, executive building editor of Better Homes and Gardens magazine. "The move is to less ostentation. The preference is for simplicity."

At the same time, buyers still want the latest products and amenities, she said, noting that the kitchen "traditionally makes or breaks the sale of a house."

And when it comes to the extras, Western homebuyers are spending plenty. Some 85 percent of the buyers said they personally chose specific options and upgrades - with a hefty price tag. The average amount spent was $22,600. For homes costing more than $500,000, the figure was $38,800. Even entry-level buyers spent nearly $13,000 on options.

The top-four options that buyers are willing to pay for are shelves and bookshelves, crown moldings, built-in home media centers, and interior window shutters.

When it comes to energy efficiency, 86 percent of experienced buyers said energy efficiency is extremely or very important in their home-purchase decision. Some 81 percent of first-time buyers said the issue is significant.

And homebuilders are responding. The NAHB, in its publication, "Building Greener, Building Better: The Quiet Revolution," outlines the ways homebuilders are striving for energy-efficient homes:

Published: July 9, 2002

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