SEATTLE, Nov. 21, 2019 — (NASDAQ: RDFN) — More than 90% of millennial homebuyers would choose a single-family home over an equal-priced unit in a triplex with a shorter commute, according to a new report from redfin, the tech-powered real estate brokerage.
“Even as we’ve seen a revival in many urban neighborhoods, the American ideal of a detached home with a white picket fence and a private lawn doesn’t appear to be changing—at least for the time being,” said Redfin chief economist, Daryl Fairweather. “While some cities and states like Minneapolis and Oregon are aiming to create more affordable multi-family housing options by eliminating single-family zoning, as long as Americans are willing to pay a premium for detached homes, developers are likely to continue building them.”
The August 2019 survey asked more than 1,400 U.S. residents who are thinking of buying or selling a home in the next year to choose a home based on the following hypothetical situation: “You find a single-family home with a backyard for the same price as a unit in a triplex (a building with three attached homes). The triplex is smaller, but meets your space needs, and has a shared backyard and significantly shorter commute. Assume the school quality and safety ratings are identical.” The report breaks down the results both by age and geography.
89% of homebuyers would prefer a single-family home with a backyard over a unit in a triplex with a shorter commute.
Among millennials, 93% would choose a single-family home, as would the vast majority of all other age groups over 25. Broken down by region, we found that regardless of where people live within the U.S., more than 85% of homebuyers and sellers prefer single-family homes over a unit in a triplex with a shorter commute.
The price premium for single-family homes over condos is declining in expensive areas and increasing in affordable inland areas.
Nationwide, the price premium for single-family homes over comparable condos—those with similar square footage, number of bedrooms and bathrooms and location—was 16% in 2019, barely changed from 15% in 2013. While the nationwide premium has remained flat, the price premium for single-family homes over condos has generally declined since 2013 in expensive metros like San Jose (single-family homes sell for 25% more than comparable condos, down from 31% in 2013) and Los Angeles (19% premium, down from 27%). At the same time, price premiums have risen in more affordable areas like Las Vegas (17% premium, up from 10%) and Birmingham (29%, up from 15%).
“Homebuyers are more willing to settle for a condo or another unit with shared walls if the home itself isn’t the defining feature of why they’re choosing a city,” said Fairweather. “In a sprawling place with an emphasis on private homes like Houston or Las Vegas, people may actually be moving there because there are plenty of affordable, large single-family homes where they can raise a family.”
Redfin users’ home search behavior shows more openness to single-family alternatives now compared to 2012.
When searching for homes on Redfin, 33% of users limited their searches to single-family homes (meaning the searcher excluded condos and townhomes) in the third quarter of 2019, down from 41% in the first quarter of 2012. That decline could reflect the pressure high home prices have been putting on buyers in the last few years. As homebuyers contend with high home prices, they may be more willing to compromise and buy a home with shared walls.
Homebuyers want single-family homes, but not necessarily large ones.
Although our research indicates that most homebuyers prefer single-family homes, the size of those homes has recently started trending downward after years of going up. The median home size in the U.S. in 1975 was 1,535 square feet. It peaked at 2,467 square feet for the typical home in 2015 and has dropped since then to 2,386 square feet in 2018.
Redfin is a technology-powered real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including theRedfin Estimate, the automated home-value estimate with the industry’s lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 90 major metro areas across the U.S. and Canada. The company has helped customers buy or sell homes worth more than $85 billion.