What do cast iron sinks, granite countertops and vinyl tile have to do with the current housing market? They’re either either too cheap or too expensive — and therefore at odds with the types of homes builders are building right now.
According to Home Innovation Research Labs, builders are increasingly turning to mid-tier priced materials, a reflection of the market’s current shift toward ‘Goldilocks’ or middle-of-the-road housing, as the number of starts on the market’s extremities — multifamily housing on the one side, and luxury on the other — recede.
Hot or not: Building materials edition
According to Home Innovation’s 2017 Builder Practices Survey these more expensive luxury finishes, materials and features appear to be on the decline:
- Jetted tubs. In 2015, jetted tubs were installed in 15 percent of all new builds. That share dropped 4 percentage points to 11 percent in 2016.
- Natural granite and marble shower and bathtub surrounds. Their popularity fell 3 percentage points to 9 percent in the same time frame.
- Enameled cast iron sinks, which are losing to more cost effective steel options.
On the flip side, these more-affordable features are also shrinking in home-start share:
- One-piece cultured marble sinks and countertops, one of the cheaper options for kitchens, have decreased from 24 to 18 percent.
- Vinyl sheet flooring’s market share shrunk from 12 to 8 percent, which aligns with the decreased market share of affordable multifamily homes in which this kind of flooring is most popular.
Features for best ROI
While cutting costs in certain areas, builders still appear confident that buyers will appreciate luxury when it comes to flooring and countertop spending — two home features that have the potential to significantly increase return on investment (ROI) when it comes time to sell.
Engineered hardwood and ceramic tile experienced a 3 percentage point jump in the market share, and classic wood floors and luxury vinyl tile have held onto their market share over the years (because who can argue with hardwood floors?)
Furthermore, quartz countertops experienced a 4 percentage point jump to 15 percent of the market share despite being one of the most costly options.
Housing types match materials market
Home Innovation’s researchers, also tracked the popularity of certain housing types from 2006 to 2016, say these small jumps and declines in the market share of certain materials correlate with the current housing market where affordable homes are scarce and luxury homes are out of reach for most.
The market share of luxury homes ($500,000 and above) and multifamily housing ($150,000 and below) has dropped while single-family detached and move-up homes, which hover around the $260,000 mark, experienced the greatest increases.
When it comes to residential housing starts, the popularity of housing types among builders matches the ebb and flow of building material market shares as well. In 2015, multifamily housing accounted for 35 percent of new residential building, but that took quite the tumble in 2016 as the inventory shortage intensified.
This falls in line with other housing research studies and monthly reports that detail the consequences of low inventory, especially at the starter home level.
In June, Trulia released a report that stated the market share of for-sale starter homes dropped 15.6 percentage points to 22.1 percent. Meanwhile, the market share of luxury for-sale homes rose 55.8 percent.
Buyers are quickly snapping up affordable listings as soon as they’re available — this spring, homes sold an average of eight days faster, with the most robust markets seeing homes fly off the market within 22 days.