Market Memo

For the record, I am not a Baby Boomer, but I know and like a lot of them.

Because there are so many Baby Boomers — 78 milliion — their tastes and attitudes towards everything from cars to vacations to housing are seemingly measured and re-measured on a constant basis. Since the late 60’s, when Boomers first asserted themselves as a mass group of young people, Boomer attitudes have been shaping the future for the rest of us. Now that the leading edge of boomers is hitting age 60, the persistent question is how Boomers will handle the aging process. (A shocking example includes Deborah Harry from the ’70s band Blondie in a copy of AARP magazine! She’s over 60 now.)

Debbie Harry

In terms of housing, there are some clear differences with previous generations. Gone are the old folks homes and retirement villages that our parents and grandparents seem to favor. They want to remain active forever. In a previous life, when I covered the new construction market (please don’t hold it against me) I toured numerous “Active Adult” communities from Del Webb and others who build age-restricted communities. The shuffle board courts have been replaced by climibing walls and mountain bike trails. The appealing message for the aging Boomer is… you don’t have to slow down when you get older.

But the real impact of Boomers on the housing market in the years ahead will be felt on the remodeling side of the equation. Look no further for proof than the rapid rise of a relatively new professional designation offered by the Remodelors Council of he National Assocation of Home Builders. Since its launch in 2002, the Certified Aging in Place Specialist (CAPS) designation has become the most popular designation offered by the 212,000 member organization. More than 1,000 remodelers, builders and contractors have succuessfully navigated the coursework required to get the designation.

The message is clear. Baby Boomers are going to seek to be active as long as possible. They will seek to live in urban areas. They will seek to have vacation homes. And they intend to not let the aging process alter their current lifestyle. What they will allow is their home to be altered to better accomodate their needs. Many will add master bedroom suites to their first floor and leave the second floor guests and returning children. Many will add decorative grab bars and use home automation technology to help them manage air tempurature etc.

But don’t take my word for it. According to the survey data from the most recent Remodelers Market Index conducted by the NAHB this summer, remodelers are getting more calls for aging-in-place jobs.

• 75% have seen an increase in requests for aging in place work
  
• 60% already perform aging in place work. Of those:
  
• 76% said they had clients who were 55 to 64 years old
  
• 67% had clients 65 and older
  
• 43% had 45- to 54-year-old clients.
  

From the same survey came the following reasons for aging-in-place modifications.

• 75% said planning ahead for future needs
  
• 53% said living with older parents,
  
• 46% said acute age-related disabilities,
  
• 23% said acute non-age related disabilities
  

The numbers don’t lie: Boomers are remodelers’ best friends.

The latest report from Harvard University’s Joint Center for Housing Studies was recently released and the highlight for those who track the residential construction industry is their assertion that despite high prices for housing, the conditions are not right for a bursting bubble.

The report tracked historical data about the economic conditions during the times when there have been major home-price reductions over the past 30 years. Importantly, those times have been characterized by overbuilding of new homes along with job losses. The report states that although there is evidence of overbuilding in many parts of the country, the employment picture is bright, with the economy adding enough jobs to pick up the slack.

“As long as the economy continues to create jobs and builders trim production to match slowing demand, house prices will keep climbing and the housing sector will achieve a soft landing,” says Nicolas P. Retsinas, director of the Joint Center.

The drivers of the remodeling market, however, are quite distinct from new construction, although there is a correlative affect regarding home prices. As housing prices have risen generally, many homeowners have seen dramatic increases in their home equity. Many have taken cash out through the re-finance process. And studies show that on average about 35 percent of that cash is rolled back into home improvements and repairs. In 2005, homeowners cashed out $450 billion in home equity… a record. So when we talk about the prospect of house price declines, we also talk about the a reduction in home equity and ultimately a lower level of remodeling activity attributable to cash-outs.

You can view the full report here: http://www.jchs.harvard.edu/publications/markets/son2006/index.htm.

CHICAGO — About eight hours into the judging process to determine the 2006 Master Design Award winners, it hit me. This business of separating the truly great remodeling designs from the really good is much tougher than it appears. Despite the long hours and many tough calls, each year we manage to attract some of the best remodeling contractors to serve as judges and to pore over the hundreds of entries we receive. This year was no different.

Watch Video

I want to thank our excellent team of judges: Dennis Allen, of Allen Associates, Santa Barbara, Calif.; Patricia Davis Brown of PDB Fine Cabinetry, Vero Beach, Fla.; Tony LaPelusa, CR, of LaPelusa Construction, Niles, Ill.; Greg Miedema, CGR, CAPS of Dakota Builders, Tucson, Ariz.; and John Quaregna, CR, of Jay-Cue Construction in North Bergen, N.J. If you know them or meet them at our Master Design Awards event Oct. 18 in Chicago, let them know that you appreciate the excellent work they did this year.

In the next couple of weeks, those of you who entered the 28th Master Design Awards will be notified how you did. I want to take a moment to congratulate all of the entrants. The feeling among our judges was that the level of competition was higher than ever before. This year, for the second time, a copy of the actual scoring sheet will be sent to all entrants. The sheets include a series of scores and comments about the project. At the very least, those that did not win will know why and what they might do in the future to improve. The winners will be published in the October issue of Qualified Remodeler. Many are being considered for feature stories in 2007.

I brought our office camera to the judging this year. And I also took some short, low-quality video-clips. I invite you to download them and to get a flavor for the final judging process — a period at the very end of judging when a Best of Show project is selected from the “Gold” award winners.

If you are interested in attending our Awards Event, please contact Heidi Riedl at heidi.riedl@cygnusb2b.com. If you are on the staff of a winning company, your ticket is free. Others can purchase tickets for $25.