The Recession’s Lingering Impact on Buyers
May 15, 2018
The Great Recession still has a lasting impact on how many consumers shop for homes today, builders say. Even consumers who did not lose a home to foreclosure during the housing crisis are still shopping for homes more cautiously than they did during the early 2000s and the height of the housing boom.
“Buyers became more cautious in the homebuying process,” says Dennis Webb of Fulton Homes. “If they were not directly affected, then they certainly know someone who was.”
The recovery has rolled on for more than eight years and builders say a new breed of home buyer has emerged. They are more cautious and prepared than buyers were before the housing crisis. For example, David Weekley’s President John Johnson says that the recession prompted more buyers to change their priorities and the size of home they desired.
“Instead of looking for the biggest home they can afford, they’re shopping for a home that fits their needs at the right price,” Johnson told BUILDER. “They are conscientious about the total costs to operate the home—energy bills, insurance, reserves, maintenance, and so on—which was not the case directly prior to the downturn.”
Further, more of today’s buyers are not stretching themselves as much financially as they did in the early 2000s with the purchase of the home and their mortgage. Some of that is because lenders won’t let them and they’ve made their underwriting standards more strict.
The American dream of homeownership shifted following the recession, says Tommy Owings, president of Silverstone Residential, an Atlanta-area firm.
“Prior to the recession, many buyers looked at homeownership predominantly as an extension of their total net worth,” Owings says. “A large swatch of the market in general has since taken a more practical approach, in realizing that they do not all need to have mini-mansions but instead appreciate the bottom-line value, maximization of space, and the realization that a home is not just an investment but a place for homeowners and families to live and grow within a healthy means.”
The building industry also has seen a lingering impact post-recession and the new-home market has still yet to fully recover. Builders have been pointing to an ongoing labor shortage from workers who left during the recession and never returned, which is delaying timetables and also raising costs in new-home construction.
Read more: U.S. Needs 7.3 Million More Homes
Source: “Buyers Still Affected by the Recession’s Hard Lessons,” BUILDER (April 30, 2018)
Updated: November 20, 2018