Making News

(Apr. 3, 2008)

With Change Comes Enhanced Opportunities

Marketing Solutions to the Generational Housing Bubble

 

The Baby Boomers account for over 78 million Americans and have been the primary catalyst for the bustling housing market during the past 30 years. Looking to the coming decade, Baby Boomers will eventually retire, relocate, and ultimately begin to decline in their market impact. This has builders, developers, architects, remodelers, manufacturers and city planners raising a series of thought-provoking questions.

What will happen when the number of home sellers outnumber home buyers (which is the case in a number of states like Connecticut, New York and Pennsylvania), and, what will happen to the overall home and building products market when Boomers attempt to sell off their homes to smaller, potentially less-fortunate generations?

This line of concerns stems from apprehension that could constitute national alarm, yet the important thing to remember is that the current housing situation and inherent generational housing shift actually paves the way for enhanced opportunity in the housing market.

Although a difficult transition lies ahead, long-standing housing trends can and should be adapted. Modern options that allow for higher-density, compact, affordable and multi-family housing developments are a necessary departure from the traditional single-family homes that have been the backbone of the historic U.S. housing market. Furthermore, it will be imperative to the future of the housing market to re-consider the aging housing stock, attract the continually increasing immigrant population, and capture the income potential of today’s younger generations. Change must be everywhere.

Elderly-friendly communities

Today’s professionals aren’t going quietly into retirement. Ruppies (Retired Urban People) are creating a new trend of higher-density housing located in the center of eclectic urban communities. Some areas, like Arlington, Virg., have embraced the attitudinal shift among their aging Boomers, developing new, smart growth housing options. Not only does this maintain the presence of the elderly within the community but it also stimulates new construction.

Additionally, it will be increasingly important to entice aging Boomers to remain as an active and vital part of the communities where they’ve resided for the past three decades. Marketing to this group directly will pay dividends in the future. Instead of encouraging segregation, communities must develop and maintain ‘healthy’ communities complete with close-by retail services, parks, activity centers, and similar amenities. The aging Boomers will remain more active than any other generation preceding them. Appealing to their desires will increase both new construction and remodeling assets.

Embracing the foreign born

As evidenced by historic trends, immigrants will remain an important source for future housing demand. According to Myers and Ryu’s white paper titled “Aging Baby Boomers and the Generational Housing Bubble,” the foreign-born share of the increase in homeowners has roughly doubled each decade since 1980.  Immigration is expected to hit a record-breaking 12 million between 2005 and 2015…and this trend shows no signs of slowing. The manufacturers distributing to regions (especially those with above average immigration inflows including California, New York and Massachusetts, among others) that embrace their foreign neighbors and establish and market to ethnically-diverse communities will reap rewards. 

 

Empower the younger generations

Overall, the younger generations buy homes at three times the rate of older generations. It’s a fact that can’t be ignored among those in the housing market. Converting this group from renters to buyers is a huge market opportunity. The fear from the current financial markets must be countered with equity-building arguments from the brands used in residential construction.

 

New Opportunities for Residential Home Products and Services

As consumer consumption habits change and new home movements and trends are embraced, there lies increased opportunities for home products and services. Taking a cue from the generational housing bubble and the number of retirees and aging Baby Boomers, we will continue to see amplified demand for aging-in-place amenities.

One forward thought is the creation and implementation of extended and highly-functional storage options, reminiscent of traditional kitchen pantries but that transcend into other areas of the home. ‘Costco Cupboards,’ as we like to call them at K&A, are driven by bulk consumer purchasing habits. Wholesale retailers like Costco, BJ’s, Sam’s Club, among others are helping to set the trend. For example, instead of buying toilet paper, soda and other essential household goods in the traditional six- or 12-packs, today’s consumers are purchasing in larger quantities of 24, 36, and even higher. This trend will drive remodeling expenditure throughout the kitchen and among other prevalent storage areas…along with increasing demand for the aid of closet organization companies and other storage suppliers.

Additionally, due to the rise of immigration trends, the prevalence of multiple-families housing will soon become the norm. Immigrant population growth points to an influx of numerous generations living under one roof. This will drive an increase in the number of homes’ master suites, bathrooms and kitchens throughout the home. As opposed to the traditional one kitchen and two bathroom household housing professionals have become accustomed to, manufacturers of residential home products may soon experience a demand for increased amounts of bathroom and kitchen amenities to accommodate increased residents. Architects will also experience opportunities to create open, more flexible floor plans to appease multiple generations living in one household.

On that same note, many of today’s singe females operating as the ‘head of household’ is increasing at a staggering rate. The idea of three head-of-households living under one roof may become the new tradition. Think of it this way. One home may be comprised of a divorced wage earner, her daughter just boomeranging from college and a widowed mother, all under one roof. It’s a new trend in living. This leads us to the movement of additional master bedrooms, or numerous master suites equipped with a private bathroom, kitchen suites and morning/breakfast kitchens.

Moreover, with the continual advancements in technology, entrepreneurs and work-from-home professionals will only increase with time. One household may call for two or even three designated office spaces—the divorcee working from home, the college graduate freelancing part-time, and even the widow blogging about her life experiences. The possibilities for residential home products, remodeling projects and new design and floor plans are seemingly endless!  

 

Housing is a constant

To ease your anxiety further, it’s expected that the ratio of working-age residents to seniors will increase 67 percent over the next 20 years, creating a conclusion to the generational housing bubble. In the meantime, challenges in the marketplace (once embraced) will eventually lead to new housing trends, superior building developments and planning techniques, along with enhanced marketing and selling strategies. A new housing market is upon us.

Looking for more housing info?

K&A is poised to release the findings from its five-year housing market forecast at the Kitchen & Bath Industry Show in early April. Stay tuned for information or click here to sign-up to be one of the first to receive your FREE copy. Also, make sure to stay tuned to the K&A Web site to receive updates on the release date of our upcoming Ruppies white paper.

  

 

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