Owning vs. renting: the equation has changed

For the past couple of years, we've repeatedly heard that all the demographic data point to the need for millions of new homes in the coming decades. In my mind, there’s a whole lot of psychology to be reckoned with when it comes to those “positive demographic indicators” – read: people – out there actually making a decision whether to build or remodel a home.

Many prognosticators seem to think the return to new home construction is all tied to the return of jobs. I’d agree having a job and feeling pretty good about the security of that job makes a big difference in people’s willingness to spend. But I believe some fundamental rules governing the equation of home ownership have changed. For several generations, the story has stayed the same:

- 20-somethings get a job, get married, buy a starter home;

- 30-somethings have kids, maybe change jobs;

- 40- and 50-somethings buy a move-up home, maybe even a second home, make home improvements;

- 60-somethings retire, empty their nests, maybe buy a retirement home….

But with Gen X and Gen Y delaying marriage, having fewer kids, frequently changing jobs (and potentially, hometowns) and – importantly – not knowing/trusting that housing is a good long-term investment, the belief system that drove the “owning is superior to renting” paradigm may have fundamentally shifted.

So even when the jobs “return” or are created, the equation of owning a home – with a 30-year mortgage – that you might get stuck with – might not quite add up for the younger generations. They’ll still need a place to live, but we may see a real shift to a bigger share of multi-family housing in the future. Hey, we’re going to have to do something with all those McMansions – maybe they’ll all get converted to duplexes!

What do you think?

Dive into your data

I recently read an article about how drug marketers are employing micro strategies to very specifically target certain combinations of demographics, geographic areas, disease states, and so on. It got me thinking about how building products manufacturers could use a similar approach to segmenting their audiences and understanding the nuances among them.

Micro strategies may be needed, and to develop these segmented approaches, your organization can begin by taking a closer look at the data you may already have. Look beyond the "averages" to understand which of your customer segments - trade and consumer - drive sales, and more importantly, profits. Most research studies report the numbers in the middle, giving you a snapshot of a moment in time. There's often a more insightful story when you dive in. Spend some quality time with your data. Roll around in it. Look at it differently. Map it. Ok, maybe that's just what geeks like me like to do. But you may be surprised what your data can tell you about where to put your efforts.

Have you ever taken a "deep dive" into your data? What did you learn?