Builders that have survived the collapse of the home building market aren’t just lucky. On the contrary, most of them have worked hard to develop strategic advantages that foster customer loyalty. For one, they know who their competitors are and how they fit into the marketplace. They also have simplified their operations to provide products more efficiently to a more highly targeted market — all while maintaining consistent quality and remaining flexible to customer needs.

But the one thing that helps builders succeed in any economic environment is a popular product. Indeed, the need to understand what home design features buyers truly want is more crucial than ever before. The most successful builders have already identified which design elements and amenities are important to various demographics, and they have adjusted their processes to quickly adapt to home buyers’ ever-changing needs.

AVID Ratings recently conducted its fifth annual Design Driver study to shed some light on the home features buyers desire most — and least. The study explores everything from “green” features and exterior materials to fixtures and community amenities. For 2011, the study revealed several shifting trends in U.S. home buyer desires, suggesting that builders need to seriously reevaluate several aspects of home construction and neighborhood development.

Of course, the trends differ among various demographics. For example, first-time homebuyers often want different things than move-up home buyers, and those looking for a second home have a different wish list than those seeking downsize or move to a retirement community.

That said, some general trends across all categories of U.S. home buyers include:

Small Is the New Big
Consumers’ preferences for grandeur and opulence during the pre-recession boom have given way to desires for smaller, more functional areas that can be summed-up as “practicality without sacrifice.” Current home buyers are well aware that big comes with a price and have developed an increasing appetite for sensible designs with increasing utility. It means that smaller footprints and footages are becoming the new normal. While many consumers are willing to forgo space, they are not equating this with having to forfeit functionality. Design creativity is requisite to adapt to this changing preference.

Think Spaces, Not Rooms
Paring nicely with the trend toward less square footage is the desire for “spaces” as opposed to “rooms.” Cordoned-off boxes are giving way to multi-function areas, driven by lifestyles that often mix family, work, and friends into the same arena. The home continues to evolve from strict borders of tasks, to blended areas of purpose, allowing home buyers to maintain their lifestyle requirements in a world of ever-increasing complexity. Zones for entertaining, working, family activities, and retreating are the focal points important to today’s home buyers. These spaces need to be understood and incorporated into designs for maximum market appeal.

Market-Driven Designs
Using a best-guess approach in today’s home building market is an unnecessary roulette game. Much like a carpenter is advised to “measure twice and cut once,” thorough research combined with even more thorough research is the formula for home building success. In the past, failures resulted in reduced profits, but in the current economy, failures mean just that. Because there is miniscule margin for error in home building today, comprehensive research is a must. Understanding your potential customers and knowing your competition is not just a wise business practice, it is an imperative survival tactic.

Density, Density, Density Across the United States, the drive toward increased density is going strong and gaining speed. Call it smart growth, intensification, or any other buzzword — but whatever it is termed, it is here to stay. This creates new demands on builders to differentiate with innovation and creativity. Not only is creativity needed in home design to adapt to the spaces that come with increased density, but site planning must also become more innovative for some of the project locations that become part of this density strategy. Traditional planning and design methods are not always congruent for intensification, and the drive toward density will necessitate increased plan ingenuity.

Green Is Gold
It does not matter what shade you prefer, because green is gold. Energy efficiency is not on the wish list for home buyers in 2011 — it is on the “must” list. Home buyers are increasingly aware of the rising costs of utilities and equally aware of what home builders can do to provide energy efficient homes with today’s building practices and technologies. Paying to operate a home is as important as paying for a home, and energy efficiency is no longer an upgrade in the mind of a home buyer. So far, the “deeper green” shades, which include renewable products or recycled materials, have not taken hold with the masses in the same way that energy efficiency has. Understanding what “green” means to potential home buyers will ensure that design dollars are invested in the areas where they will provide the best return.

Outdoor Living Is In
There is strong interest in outdoor fireplaces and outdoor cooking areas, indicating that home buyers are looking for homes that expand their living space by incorporating functional outdoor rooms. Thus, ground-floor walkouts and covered patio areas are high on home buyers’ wish lists.

The Top 10 Must Have Features

The Design Driver study analyzes the level of importance each buying group gives specific home features. While there are variances within each category, the top 10 U.S. “must have” features that appear desirable across the board include:

Walk-in Closets: In each buyer category studied, the walk-in closet came up as a must.

Energy-Efficient Appliances: More than ever, home buyers are focused on the energy costs associated with running their homes. For most of them, keeping energy costs low starts with energy-efficient appliances.

Linen Closets: With the drive toward smaller spaces, there’s an increasing need for functional storage of all types, and linen closets are an essential element for today’s home designs.

Large Kitchen: With the kitchen serving as the hub of daily life, it’s not surprising that the vast majority of home buyers are looking for a large one.

Overall Energy Efficient Home: In addition to energy-efficient appliances, home buyers want their entire home to consume less energy. Home builders that offer affordable solutions for driving down heating and cooling costs have a major advantage over the resale market.

Kitchen Island: To make smaller homes more functional, living rooms, dining rooms and kitchens are being combined into one great room that serves many purposes. Kitchen islands provide a place for casual dining as well as a way to separate the kitchen from the rest of the great room.

High Window Efficiency: Everyone loves sunlight and fresh air, which is why most home buyers love lots of windows. However, to keep heating and cooling costs down, they are willing to spring for high-efficiency windows.

Ceiling Fans: One of the easiest ways for home owners to stretch their heating and air conditioning dollars is to use ceiling fans, which is most home buyers rank them as a “must have.”

Home Office/Study: Whether they’re telecommuters or sole proprietors, more people are working from home than ever before, making the home office or study a key design feature.

Walk-In Pantry: The Great Recession has forced a lot of people to economize, especially on how much they spend on groceries. Warehouse club memberships are up, but home owners need a place to store those cases of canned soup and industrial six packages of paper towels. That’s why walk-n pantries are key.

Low-Demand Features

Features that are losing desirability varied among the home buyer categories. However, there are a few items that seem to be losing their appeal across the board, including:

Laminate Cabinets: Nearly 8 out of 10 U.S. home buyers do not think laminate cabinets are important. Instead, most home buyers prefer solid wood designs.

Laminate Countertops: Three out of four home buyers couldn’t care less about laminate countertops. With the kitchen being the hub of family activity, home buyers are looking for natural or other solid countertop materials.

Tile Countertops: Ease of maintenance is a key attribute for today’s home buyers, which is why 67.2 percent do not think tile countertops are important.

One-Car Garage: Despite the trend toward smaller homes, nearly three-fourths of buyers prefer a two-car garage, which often double as storage space even when the owners only have one car.

Vinyl Siding: Curb appeal is important to today’s home buyers, and most consumers don’t think vinyl siding is important.

U.S. home buyers have undergone a “reset” in their preferences and priorities following the recent economic upheaval. Home builders must account for these changing design drivers to be successful in plan development and marketing. Understanding what features to invest in, and what features to divest of, will help drive profitability by increasing market appeal and reducing unnecessary costs.

This article only scratches the surface of the research results contained in this year’s AVID Design Driver study. To view the full results on AvidBuilder.com, click here.

Paul Cardis is founder and CEO of AVID Ratings, the leading provider of customer loyalty research and consulting to the home-building industry. Through the AVID system, home builders improve referrals, reduce warranty costs, and strengthen their brands. He can be reached at paul.cardis@avidratings.com.