The myth of Location, Location, Location!
If you have read my blog before, you might know that my (current) mission in life is to make “Comfort” a relevant housing attribute in the housing market. I want people to actively look for comfortable homes and enterprises to see incentives to improve comfort. (Pretty much like the technology sector, which every year invests in research and releases a new better performing product.) I want to Make Comfort Great Again! But, can Comfort compete with the heavy-weight housing attributes of location, size and price? Maybe no, but it does not need to.
Location, size and price are very often said to be the housing attributes that people care the most about. This is true, and there is no way around it. We care about the location of properties because we do not like to commute; about their size, because we need it (or because we are spoiled, I won’t judge); and about the price, because our resources are limited. In fact, we care so much about these attributes that these are the first ones we use. And there is the key... Let me say that again but more slowly: Location, Size and Price are the FIRST housing attributes we use when we search for a new place to live.
For some reason (there are reasons, but that is not the point of this article), it is common to assume that people who search for a new home do so with an Excel spreadsheet in their hands. We tend to assume that people look at all the characteristics of all the properties simultaneously, aggregating them into a single score that they use for comparing housing alternatives and making decisions. But people don’t search like that. The search for a new home—just like the search for other products in the world—is a process that happens in stages. Let me give you an example. Specifically, let me tell you about my experience.
Let’s assume that I want to move to a new place. Personally, one of the first things I would do is to go to a property listing website and see what is available. The only problem is that the number of available properties is close to 1,230,092,021. This is huge! It is impossible for me to use a spreadsheet! But, this website allows me to narrow down the possibilities. What are the criteria I am allowed to use for filtering? Of course, the location, size and price (and sometimes something else as well). Using these criteria, I filter the possibilities to 708. This is much better, but this is not over! I still cannot make a choice from 708 properties. To make things worse, since all these options have an “acceptable” Location, Size and Price, I need to compare properties based on other criteria... How about the view? Are the kitchen benches nice? Is the doorbell well maintained? Is it insulated? Based on these criteria, I will choose some properties for visiting them. What will I check during those visits? Well, pretty random information, to be honest… I, of course, already know the location, the size and (at least an estimate of) the price of those places.
My point is that, if you think about the home-searching process as an action that happens over time, comparing attributes is somehow meaningless. Knowing which attributes are important is not enough, you also need to know when they are important. Of course, trying to sell a poorly located home will be tricky, mainly because it will always be filtered out by people who use the tools of the property listing website. However, attributes that are not as important as the location are actually very likely to be the ones that trigger the final purchase decision. I have heard of people purchasing properties because they fell in love with a tree in front of the main door, with the garage, or they simply loved the possibility of putting a barbecue on the balcony.
In summary, the attributes that trigger the final housing choice are not necessarily the first ones that people think about. These are often housing attributes that become relevant after location, size and price have been satisfied, but they are no less important. If you ask me, Comfort belongs to this group: people definitely want comfortable homes, but they also want to be able to afford them, they need them to be in locations they like, and they need to have an appropriate size for them. However, they will very rarely compare the location of a dwelling with the quality of its daylight; but if there are more than one properties in a similar location, the quality of their daylight can become the determining factor.
Insights like this can help us create value by improving the quality of the housing stock in the world, making people’s lives better and reducing the environmental impact of the housing sector. Check my other blog posts to learn more about the implications of my research, and get in touch if you want to know more.