Photo: Flickr via oter
The recession may have done a number on the so-called American Dream––the McMansion, a cushy retirement, white picket fences, etc.––but consumers haven’t given up completely.When Trulia asked more than 2,000 prospective homebuyers what they want in their ideal home, they found levels of optimism that aren’t quite matching up with reality.
“As the economy recovers, people are dreaming bigger, but most won’t realise their dreams anytime soon,” said Jed Kolko, Trulia’s Chief Economist. “Buyers need to take a hard look at what they can actually afford, and give themselves some cushion in case a Euro crisis or federal budget battle pushes us back into recession.”
Here are three ways we may be kidding ourselves:
The dream: Among current renters looking to buy homes, nearly two thirds said they wanted a master bedroom, more than half vied for a walk-in closet and 50 per cent said they wouldn’t settle for less than a gourmet kitchen. Pools and hot tubs were next on the list, with 24 per cent and 22 per cent of the vote, respectively.
Reality check: Among actual homebuyers, only 26 per cent said they had master bedrooms, followed by 35 per cent with walk-in closets and a mere 9 per cent scored on the kitchen front. And you might want to check out your local YMCA for pool time. Just 10 per cent of homebuyers have them and even fewer (6 per cent) kick back in hot tubs at home. Says Trulia: “Consumers would be wiser to set their sights on the dream amenity that’s more likely to come true: wood floors, which 47% of renters want and 35% of buyers said they had in their first home.”
The renter-to-buyer transition
The dream: pummelled by sky-high prices in an increasingly competitive rental market, more renters are dreaming of the day they’ll get to be their own landlords at home. The vast majority (78 per cent) of renters said they plan to purchase a home in the future, a 6 point jump from 2011, according to Trulia. And about 27 per cent––five points up from last year––said they’ll hit the housing market within two years.
Reality check: The housing market may be rife with shuttered homes being sold for a steal, but many renters have found themselves stuck in a financial rut too deep to realistically hope for a home anytime soon. Nearly half surveyed said they weren’t sure they could afford a downpayment and one-quarter said they doubted whether they’d even qualify for a home loan.
The return of the McMansion
The dream: The number of people who set their sights on super-sized digs (3,200 sq. foot-plus) has nearly doubled from 6 per cent to 11 per cent in the last year. And 17 per cent more homebuyers said they envisioned buying 2,600 sq. foot homes this year than in 2011.
Reality check: Our eyes might be bigger than our budgets. About 40 per cent of Americans’ wealth disappeared over the last five years, the Federal Reserve reported, and some estimates put consumers’ true net worth back at 1992 levels. There’s also the housing market’s inventory to consider, Trulia notes:
“Although newly constructed homes are getting bigger, most inventory is existing homes, including foreclosures, and the current inventory of for-sale homes skews smaller than most people’s idea…Meanwhile, the super-sized category –3,200-plus–is pretty much on the money, but the majority of available homes fall in the smaller size categories–800 to 2,000 square feet. That means many Americans may have to downsize their dreams to fit a smaller reality.”
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