ReNews -- Remodelors Council News - 02/15/2006
(Plain Text Version)
Vince Butler CAPS, CGR, GMB
RemodelorsTM Council Chair
View Graphical Version | Subscribe to NAHB Publications | Email our Editor...
Home Page| Browse other NAHB e-publications |Search
In this issue:
EPA Puts Sweeping Lead Paint Regulation in Federal Registry
Remodeling Growth Will Cool in 2006
Baby Boomers Won't Bust Remodeling Market
Vince Butler to Lead Remodelors Council in 2006
Council Launches New Consumer Ad
Ed McGowan, Council Leader, Dies at 69
Remodelors Council in Wall Street Journal and More!
Committee Highlights from 2006 Remodelors Council Winter Board
Show Others Your Professionalism
Baby Boomers Won't Bust Remodeling Market
Home builders and remodelers can stop worrying about the baby bust that was supposed to slow demand to a relative trickle following the exuberant years of the expansive baby boom generation, according to William Apgar, director of the Joint Center for Housing at Harvard University.
From research with colleague Amal Bendimerad on the demographics of U.S. households, Apgar told an audience at the International Builders’ Show last month in Orlando, Fla. that it is now apparent that the Gen X population, those born between 1965 and 1974, has received a healthy infusion of immigrants and in sheer numbers has come within hailing distance of the massive post-World War II generation born between 1945 and 1964.
“What looked like a big cliff is now just a small valley,” Apgar said. The Generation X population may now be about 5% smaller than the generation that has just preceded it, he said, but that difference will be hardly noticeable to the housing industry because Gen Xers spend more.
Apgar listed several demographic findings about GenX suggesting expanding opportunities for builders and remodelers:
- They are marrying later and having fewer children. Now 30 to 39 years old, 24% of Gen Xers have never tied the knot, compared to 20% of the members of the trailing segment of the baby boom generation (born between 1955 and 1964) when they were that age and 13% of lead baby boomers (born 1945-1954). Gen Xers are the parents of an average 1.66 children, compared to 1.7 of trailing baby boomers when they were in their 30s and 1.77 of leading boomers.
- Generation X is far more diverse, composed of 65% who are native-born whites, 20% native-born minorities and 15% foreign-born. Seventy-nine percent of the leading and 74% of the trailing halves of the baby boom generation were native-born whites.
- Generation X is moving into homeownership faster. When Gen Xers were moving into adulthood, housing affordability was a problem, so in high-priced markets their starter homes were condominiums, Apgar observed. As for remodeling, “they did it themselves, because they had to,” he said. At age 30-39, 71% of native born whites and 46% of minority and immigrants own a home. At the same age, 66% of white and 38% of minority and immigrant lead baby boomers were home owners; and those numbers were 64% and 36%, respectively, for trailing baby boomers.
- Generation X is wealthier, with a median household income of $64,409 in 2004, compared to $40,340 for lead baby boomers when they were in their 30s and $52,120 for trailing baby boomers (all in 2004 dollars).
Dissecting home improvement activity by generation, Apgar demonstrated that Gen Xers are likely to be a healthy force in the nation’s housing market and will be able to pick up the slack as the baby boom jolt begins to fade:
- Spending by Gen Xers on home improvements is already rivaling spending by baby boomers. Joint Center for Housing Studies tabulations of American Housing Survey findings show that average household expenditures on home improvements for Gen X were $2,240 in 2003; $1,318 was performed by professionals and $922 by do-it-yourselfers. Trailing boomers spent $2,329 ($1,686 by professionals and $643 DYI) and lead boomers spent $2,051 ($1,588 and $463).
- Each generation is outspending its preceding generation on home improvements (in constant 2003 dollars). Gen Xers in 2003 spent roughly $2,200 compared to the $1,800 trailing baby boomers spent in 1995. Trailing baby boomers spent $2,300 in 2003, compared to $2,200 by lead baby boomers in 1995. And older baby boomers spent $2,000 in 2003, compared to $1,800 by matures (born between 1935 and 1944).
- Average spending for large and discretionary projects has increased (in 2003 dollars). The average expenditure for a Gen X kitchen remodel was $4,581 in 2003, compared to $3,137 for these jobs by trailing baby boomers in 1995. Gen Xers spent an average $2,820 on bath remodels in 2003, compared to $2,241 for trail boomers in 1995. And Gen X deck and porch remodels averaged $1,966 in 2003, compared to $1,353 for 1995 trailer remodels. Tending to live in smaller spaces than their predecessors, Gen Xers are in the market for top-line kitchen appliances and “certain commodities that definite quality of life,” Apgar said.
While there is a scarcity of survey data to substantiate the emphasis of Gen Xers on quality, Apgar said that consumer design magazines provide a good idea of the products they are looking at. New construction is defining the upgrades, and condo developers, who have to grapple with soaring land costs and still provide “essential frills” for their buyers, are doing a good job, Apgar said, of putting the value package in while maintaining certain price levels.
For more information or to contact us directly, please visit www.NAHB.org
| ©2005, National Association of Home Builders