Tomorrow’s Remodeling Clients, Today
authors Patrick O'Toole
What is a generation?
And how do a generation’s values and behaviors impact business now and in the future?
Straightforward as they may seem, these questions often leave small business owners and remodelers scratching their heads. This stands to reason. Big-picture discussions of demographics feel far removed from the personal networking and local marketing that tends to drive successful remodeling businesses.
For the record, a generation tends to be a 20-plus-year period in which a group of people move from childhood to adulthood.
The generation born immediately following the end of World War II, 1946 to 1964, is known as the Baby Boom. Because of its size, 78 million strong, Boomer preferences have shaped American life for many decades.
Leading-edge Boomers today are moving beyond middle age. It is estimated that 10,000 reach age 65 each day. And because Boomers have jobs and money, they continue to drive most major-project remodeling activity. The trouble is that the oldest Boomers, now 71, and the youngest boomers, now 51, have very little in common. One group is largely retired and the other is working and sending kids to college.
This wide range in ages within a single generation makes the job of understanding a cohort’s preferences for housing, lifestyle and consumer goods difficult. In their new book, Big Shifts Ahead: Demographic Clarity for Businesses, John Burns and Chris Porter break new ground by studying groups in smaller, decade-long segments.
By studying those born only in the ’50s, ’60s, ’70s and so on—one decade at a time—the authors succeed in offering clearer, more actionable insights. Because Burns’ day job as CEO of John Burns Real Estate Consulting involves consulting homebuilders and real estate investors, the book puts a spotlight on lifestyle and homeownership trends that are often directly transferrable to remodelers.
“We walked through how different life has been for people born in the 1950s vs. the ’70s, vs. the 80s. It just brought a lot of clarity to some ideas,” Burns says. “So someone born in the 1950s is turning 65 sometime over the next 10 years. And it is a big group. There are 40 million of them vs. 24 million people born in the 1940s. They have $18 trillion in net worth, more net worth than those born in any other decade. They are the heart of the Baby Boom. They are workaholics. They are 7 percent more likely to be working today in their early 60s than those born in the 1940s were. So offering comparisons of 10-year periods, I think, was the biggest clarity that we brought, frankly.”
What follows is a summary of the book’s decade-by-decade analysis of Americans as homeowners and consumers from the 1930s to present. Each decade was given a name by the authors based on their dominant trait and impact on the larger society.
Twenty-four million Americans were born in the 1930s. About 12 million are alive today. That number will shrink to 6.5 million by 2025. They are aged between 77 and 86. As the moniker suggests, Savers were deeply impacted by the Great Depression into which they were born.
Later, as the American economy boomed, they prospered and helped bring about a massive growth in homeownership. From 1940 to 1960, the homeownership rate grew by 18 percent nationally. Nearly 80 percent own homes today.
Remaining very active and often the beneficiaries of strong pension plans and savings, this group is an important driver of new remodeling and home improvement projects in 2017. Not surprisingly, their No. 1 priority is health, wellness and comfort.
This group ranges in age from 67 to 76. Twenty-three million of the original 32 million Achievers remain alive today. Immigration accounts for an additional 3 million.
The Achievers were the first to grow up in the suburbs. A higher percentage of them went to college and experienced the changes of the 1960s while they were in their 20s. They were the first group to use credit cards, beginning in the late 1960s. And they tended to have a high rate of homeownership.
Those born in the 40s had a higher propensity for dual-income households. This trend exposed the stark differences in education and pay between women and men at the time. From a housing standpoint, this group saw their pre-retirement incomes grow dramatically. This generation is known as Achievers for this reason. They are working far past the traditional retirement age of 65. Many expect to live longer and be more active doing it. They like walkability in their neighborhoods to retail and other amenities. They tend to live in cities and urban areas within suburbs.
This group is the heart of the Baby Boom. Forty-one million of them, now aged between 57 and 66 years of age, are having a profound impact on the world and housing in particular.
Today 36 million remain alive and are joined by another 6 million who immigrated to the U.S. Motivated by the science of the space race in the 1960s, this group has been responsible for many of the technological advances in computers and bio-tech, thus the Innovators label.
This group benefited from decades of sustained economic growth. Their homes grew dramatically in value. The group experienced very high rates of entrepreneurship. Today they have a combined $18 trillion in net worth. Today’s ’50s Innovators are huge drivers of discretionary remodeling activity. They will work past age 65 like no prior decade group. This is in part driven by their active lifestyles that include expensive travel. They will work and earn and spend without concern for arbitrary retirement ages.
Racial and gender equality—in terms of education and income potential—characterize this group
of 43 million Americans. Two-thirds of working-age women from this cohort hold jobs. More women than men from this group graduated from college. This is partly due to the implementation of Title IX in 1972, which increased women’s access to college.
Despite rising incomes and the increase in dual-income households in this cohort, those born in the 1960s have acquired a much lower net worth than their previous three decade-long predecessors.
The second half of the decade is part of Gen-X, which is a group that was hit hard by the housing bust in 2008. Many bought high and were wiped out when prices fell. This much lower average net worth is also due to slower economic circumstances. The book points out that the economy in the 2000s grew only slightly faster than it did in the depression-era 1930s.
This generation will work longer than previous age groups. Nonetheless, the group is now at peak earning years and is an important remodeling and home improvement clientele.
Thirty-three million Americans were born in the 1970s. This is the heart of Generation X or the Baby Bust. But their lower numbers were more than compensated by increased numbers who have immigrated to the U.S. That is why today there are over 40 million Balancers in the country.
Balancers were still in early adulthood on Sept. 11, 2001. The authors point out many trends changed that day. Balancers made it a priority to balance work and family. To that end, the number of dual-income families began to decline. Also, time away from work has become a priority for this group. Balancers were hit the hardest by the housing bust of 2008. That is why Balancers have the lowest net worth of any group its age in generations. They are spending less on their homes, but they are of an age that would normally be updating kitchens and baths. Therefore, they are an important remodeling cohort today.
About 37 million Americans were born in the 1980s. They are now aged between 26 and 36 years old. The group is augmented by 8 million immigrants the same age. In fact, by 2025, the number of 1980s Sharers in the U.S. is expected to grow to 45.6 million. This is the leading edge of a generation most commonly known as Millennials.
The group is significant for two reasons. First, it is the biggest cohort in the U.S. Second, as Baby Boomers retire and shrink in size, it is the preferences of Millennials that will guide marketers. Those born in the 1980s created the Sharing economy—AirBnB, Uber, social media, etc.
This group is less competitive than prior generations. This stands to reason. Fully 30 percent of Sharers say debt is keeping them from buying a house. On top of that, they are forming households far later than previous groups. The remodeling and home improvement preferences of Sharers are yet unknown.
Many Sharers were just entering the job market when the Great Recession hit in 2008. The cost in earnings and net worth has been significant. The book points out Sharers take pride in stretching their resources in new ways.
It is not fully known how Sharers will impact the remodeling market, but technology will certainly be a key to reaching this very large group. Sharers are single and live in cities. It is projected that they will move to the suburbs as they marry and have kids.
About 39 million were born in the U.S. during the 1990s. Four million others have immigrated to the U.S. And by the year 2025, this cohort will number approximately 47 million, at which point, they will be the largest decade grouping of any other in the country. There are more 23 to 27 years olds living in the U.S. than at any point in history.
They are called Connectors due to their wide use of technology and and social media to stay in touch with parents, family and friends. They have accepted a lack of privacy as a matter of course. Many give up their locations on the internet in order to get a coupon.
Connectors are struggling to find good jobs. That is why they tend to spend less readily than their parents. Significantly, they are also using less credit than their parents. They are most like the 1930s Savers in their habits. But only time will tell if they can achieve the same economic benefits enjoyed by the Savers cohort.
Forty-one million were born in the U.S. in the 2000s. By 2025, they will be the second largest cohort, numbering 43.6 million, including immigrants to the U.S. Not much can be known about this group today, but they are called Globals because of the highly multicultural, interconnected world they occupy. This generation will be saddled with government debt and lower levels of retirement contributions.
’50s and ’80s Dominate
Big Shifts Ahead shows that studying decade-size demographic groups is an effective way to gain clear trend insights. With larger generational cohorts like Baby Boomers and Millennials, the age disparity tends to muddy the picture rather than elucidate it.
In 2017, the most-watched cohorts, for their potential remodeling activity, should be Baby Boomers and Millennials. Their size dictates their importance. And in the coming years, it will shift from a Boomer market to a Millennial market. That change is happening now. | QR