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What kind of Home Buyer Are You?

Main / Idaho Real Estate Insights

Do you search for Homes like you buy a car? Buying Idaho Real Estate is not much different.

In the simplest definitions there are two types of home buyers searching the Idaho Real Estate MLS shopping for homes

The best deal
The Highest Value

Compare Idaho Real Estate

Home Buyers are like car shoppers also. You won't find someone looking for the best deal in a new car showroom They want used. They want something they can trust will run but they don't want to pay the premium.

Similarly, You won't find someone looking for a Mercedes or other high end luxury car shopping at the Kia dealership. For these people there is an intrinsic value to buying a Lexus or just a new car. There is status, peace of mind and pride. You also will not find buyers who are considering a Kia at the Mercedes Dealership.

Purchasing a new homes is similar. Some people wonder why someone would ever buy a new home when you can get more for their money in a used home. Some people just want what they want. Maybe they have earned it, maybe it is status or maybe the believe new is just better. These buyers also come in groups. You won't find someone wanting a custom home looking at cookie cutter homes and you won't find someone wants wants new but looking for the best deal considering a community like Two Rivers. They are different buyers.

What kind of home buyer are you?

Trey Langford
Founder

Posted by tlangford at 12/3/2008 4:52 AM

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Comments (7)

Re:What kind of Home Buyer Are You?

I don't understand why new still has a premium. Input costs have collapsed from lumber to land. Labor should be 50% off too. Trey help me understand what is keeping new construction prices so high. We should be building at 1997 price levels which is lower than used right now. Are the builders too greedy still? Is land to expensive still?

Thanks

Posted by emdeplam on 12/3/2008 12:15 PM

Re:What kind of Home Buyer Are You?

Oh, and my other thought...I think in the analogy to cars we should call people 'leasors' not buyers. People aren't building equity, they don't ever really own their homes so it is not really buying now is it? With a car loan >80% of people pay it off.

Posted by emdeplam on 12/3/2008 12:23 PM

Re:What kind of Home Buyer Are You?

Emdeplam I think you have some good thoughts. The biggest driving factor is lot price and that fact that they need to come down another 15% in most areas. Keep in mid they are all ready down over 50% from the peak. Maybe CBH or Hubble, because of volume, can get their labor down 50%, but any skilled labor is down maybe 25%. Any lower and they will not be able to keep their business legitimate. Since 97 the cost of doing business and the cost of living has jump tremendously. The City/County has raised their permit fees a $1000/year on average for the last 4 to 5 years, with no extra perceived value to the builder/homeowners. 4% to 6% margins are the lowest a builder can go without creating bad business deals. Any builder operating, or trying to operate, above these margins right now is foolish. Again these margins are down about 75%. As you can see the builders and laborers are doing there part, it is the City/County and developers that need to get on board.

In general there is not a premium on new homes vs existing, especially if you want to build right now. Buyers can negotiate price with developers and labor, materials and margins are as low as they can go. Interest rates are looking pretty good also!

Posted by Scott Flynn on 12/3/2008 4:30 PM

Re:What kind of Home Buyer Are You?

Emdeplam,
One day we need to meet. You always want to take life out of the equation, much less people and guess what, if people made sense it would be a boring place to live.

I think you would agree that buying a Ferrarri is not a good deal compared to other cars. It may be better but it does the same thing a used Kia does for a twentieth of the cost. So why do people buy the luxury car. It is also an emotional purchase. Pride, Prestige, and Perceived Value! Are new homes that different? Obviously not because people are paying more for a new home, still? I know that blows you away, okay probably not, you would just disagree with their decision I'm sure.

Anyway, the point is that people make emotional decisions when it comes to real estate just like cars. I also think that if builders paid a little closer attention to this fact, some of the would not be in hot water. It all has to work though, the community, the home, the location and the look and feel of it all.

Trey Langford

Posted by tlangford on 12/3/2008 7:49 PM

Re:What kind of Home Buyer Are You?

Scott- Thanks for the analysis, you make good points and I have no real data to argue. I suppose the labor market is still too tight in Ada for us to start getting pressure on wages down to 1997 levels. It seems without this we are at the bottom of the margin curve.

Trey- Thanks, when I look at a new green product like Scott's I agree there is emotional premium...I like green and his stuff. When I look at 90+% of new homes CBH, Hubble- well what can I say. On the flip side I find much more emotional appeal in the N End, East end etc.

Keep up the good work showcasing 'quality work' in new construction! When I see MOST of the valleys homes over the last 5 years I feel sick...lack of planning, cookie cutter, poor quality, ...blah, blah blah. The valley will be a better place when those builders are all bankrupt, banks make sensible loans that aren't 'foreclosure bombs in waiting' and we have attractive and well planned construction.

Posted by emdeplam on 12/4/2008 8:30 AM

Re:What kind of Home Buyer Are You?

I have a story to tell, speaking of blah, blah blah. One time a realtor asked if she could give me a tour of a home and I told her I was not interested. She was way surprised and proceeded to tell me how beautiful it was with granite counter tops an all the upgrades. I explained to her that I had seen it all before. I don't think she understands innovative design. I also don't think she understands if you've seen 100 granite tops you've seen them all. Those things accentuate great design and character of a home. That is why people like the north end. The homes are distinctive! Add great woodwork, beautiful trim work, and other things that take talent not just money.
Trey Langford

Posted by tlangford on 12/4/2008 9:06 AM

Re:What kind of Home Buyer Are You?

Granite!!!! I HATE GRANITE...no real cook likes using it as a surface...it will become an eyesore and a symbol of a time gone wrong years from now. Is it just me or does 50% of the MLS list granite counters! Lipstick on a pig

Posted by emdeplam on 12/4/2008 10:12 AM

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