In The News

iNest Study Highlights Spending for New Home Construction Optional Upgrades

To assist homebuyers with budgeting appropriately for their new home purchases, iNest Realty (www.iNest.com) announces the results of its inaugural Survey of New Home Upgrades, an analysis of spending for new home construction optional upgrades.

According to iNest Realty's 2006 Survey of New Home Upgrades–which reviewed more than 9,300 transactions conducted by its clients from 2003 to 2005–the majority of markets in the study experienced increased upgrade spending. For instance, Orlando new homebuyers spent 7.9 percent in 2003 on optional upgrades and 11.4 percent in 2005. However, some markets sharply decreased their spending on optional upgrades, such as Las Vegas which plummeted from 9.6 percent in 2003 to 2.9 percent in 2005. That said, spending on optional upgrades in Las Vegas in 2005 did not completely disappear, as spending on upgrades for some builders was as much as 16 percent.

More than ever before, homeowners strive to customize their living spaces, making their homes reflective of their personalities and unique lifestyle needs. Building a semi-custom home provides consumers with a blank canvas upon which to imprint their design and lifestyle preferences. New home construction buyers have numerous upgrade options that are offered throughout the homebuilding process and should plan to budget ahead of time. Amenities like a family room fireplace, a side-access security door to the garage and a sheet rocked garage and door opener may be considered extra.

"Homebuyers are taking advantage of all the unique, luxurious options offered by builders today," said Randy Pickard, vice president of marketing for iNest Realty. "Builders are increasingly offering more enticing options that allow new homebuyers to truly customize their new home."

According to iNest Realty's 2006 Survey of New Home Upgrades, the amount spent on options and upgrades during new home construction varies based on a home's price point. The base price of a home can be directly correlated to what new homebuyers are spending on upgrades. In 2005, buyers of new homes and town homes with a base price of under $180,000 added an average of 7.3 percent in optional upgrades. Those homes and town homes with a base price of $180,000 to $300,000 spent 9.7 percent and those with a base price of $300,000 and higher added 11.4 percent in optional upgrades.

While the percentage of total cost accounted for by optional upgrades varies from region to region across the nation, it also varies widely from builder to builder and from new home community to new home community.

Geography also impacts the range in cost of upgrades as a percent of the total price as well as what people are spending in general. Noteworthy increases in optional upgrade spending in various markets from 2003 to 2005 include:

Ft. Myers area (5.7% in 2003 to 15.0% in 2005),
Charlotte (5.9% in 2003 to 10.3% in 2005),
Salt Lake City (7.8% in 2003 to 11.6% in 2005),
Baltimore (9.1% in 2003 to 12.3% in 2005),
Raleigh-Durham (6.4% in 2003 to 9.4% in 2005).

However, from 2003 to 2005, the average amount spent on upgrades in Las Vegas plummeted from 9.6 percent (in 2003) to 2.9 percent (in 2005) and in Jacksonville with 12.1 percent in 2003 to 7.7 percent in 2005.

In Florida, where new construction continues to boom, spending on upgrades have increased more rapidly in Orlando than Tampa. In 2003, new homebuyers in Orlando spent 7.9 percent of the total home price on upgrades and 11.4 percent in 2005. The average cost of upgrades (as a percentage of new home cost) did not increase as rapidly in Tampa. For the same period in Tampa, while the percentage of the total home cost spent on upgrades was generally higher, it did not increase as dramatically (11.1 percent in 2003 to 13.9 percent in 2005).

Upgrades to some new home construction could account for a significant portion of the overall home price, as is seen in the results of selected builders in the following markets in 2005: Greensboro/Winston-Salem, NC (35.3%), Phoenix (31.3%), Fort Myers, FL (30.6%) and Greenville/Spartanburg, SC (28.6%).

"Production and semi-custom home builders employ many strategies when positioning their selection of available upgrades and options," said Pickard. "Some builders even tout that everything is included. The burden ends up falling on homebuyers to read the fine print and engage their builders in candid discussions in order to be fully aware of what is included in the base price, what is extra and how this will impact the overall price of their new home."

iNest Realty's 2006 Survey of New Home Upgrades study reviewed more than 9,300 transactions conducted by their clients from 2003 to 2005. The study was conducted in January 2006 and reviewed leading production builders in the $150,000 to $450,000 price range. For more information, visit http://www.internest.com/inthenews/upgrades.asp

About iNest
iNest is a leading real estate broker specializing in newly-constructed homes. Through its proprietary program, iNest provides consumers with a robust database of new home builders and communities with flexible search options, an expansive network of local field agents, and a team of New Home Specialists available seven days a week to assist home buyers in finding the perfect new home. In addition, iNest offers an exclusive cash bonus program, which allows qualified users to earn one percent back on the purchase of a new home. To date, iNest has served more than 13,000 buyers resulting in more than $28 million in rebates.

Contact:
Randy Pickard
iNest Realty Inc
630-529-7500
rpickard@iNest.com