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CLIMBING HIGHER ON THE HOUSING LADDER: Extending the Columbus Repeat Homebuyer Study by Hazel Morrow-Jones, April 2002

The purpose of this study is to extend research that developed a tool for predicting repeat homebuyer satisfaction after a move. The original study was conducted using data on repeat homebuyers in Franklin County, Ohio, who moved in 1995. This extended research examines repeat homebuyers from the seven county central Ohio region in 1998. In addition, the research compares two different measures of satisfaction after the move.

The main measure of satisfaction from the 1995 study was the level of agreement from 1 (strongly disagree) to 7 (strongly agree) of the respondents with the statement "This home is better than my last home." The 1995 study built six models using groups of independent variables and OLS regression to predict the value of the measure of satisfaction. Four of those models are replicated in this study. The results indicate a strong degree of consistency between models developed using 1995 data and those developed using 1998 data as well as models developed for Franklin County only, for the counties outside Franklin County and for the whole region. The strongest model built using variables that would be available before the house purchase decision was made succeeded in explaining 30% of the variation in satisfaction. The models were consistent in strength, in variables that entered the models and in the direction of the relationship with the variables.

These results indicate that models for predicting client satisfaction in the central Ohio repeat homebuyer market should at least include data on the likely selling price of the home the client is selling, the household income and the importance of two key reasons for moving (the desire for a larger home and the desire for a newer home). The higher the sale price of the former home the more likely the new home will be considered inferior. Especially for those people moving down in price the agent will need to take special care to help them find a home that will satisfy their needs. The higher the household income the more likely the new house will be viewed in a positive light. Those who are clear about a larger or newer home being important are easier to satisfy than those for whom these factors are less important. This last item may reflect the relative ease of serving a client who is clear in what they want. They may also reflect the fact that if a client wants a larger home or a newer home those things are easy to find. It is much more difficult to help a client move down in size or to an older home but still find one that is better than their last house was.

The alternative measure of satisfaction was the respondent's level of agreement (1 to 7) with the statement "I am glad I moved". In theory a respondent could move down in housing size, price or quality and thus honestly say that their new house was not as good as the old house, while still being glad to have made the move and thus be quite satisfied. This alternative satisfaction variable was strongly related to the Better House measure, but turned out to be predicted by different variables. It was also not as easy to predict as the Better House measure and could not be predicted well with variables available to an agent in advance of the purchase of a new home.

These studies have provided a useful tool to assist real estate agents, though not to replace the skills necessary to successfully match buyers with their new homes as shown by the success levels of the models. In addition, however, they have provided information that helped to pass the 1997 change to the federal capital gains tax treatment of owner occupied housing and have been important to achieving additional outside funding for further research on homeowner satisfaction.

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