TALKING ‘BOUT MY GENERATION Targeted market segmentation is not the only method being employed to dig deeper into homeowner buying tendencies. Traditional demographic variables, such as age, seep into the HIRI groups: The name “Pro Inclined ‘Matures’” hints at older homeowners, and “Upscale Researcher Boomers” suggests people of a certain generation.
In fact, generational spending habits have been the focus of recent research from the Joint Center for Housing Studies at Harvard University (JCHS). Its findings have been that generations don’t spend the same way, says Amal Bendimerad, the JCHS research analyst who has spearheaded the project. In other words, we can’t predict how Generation Xers (currently 30-to-39-year-olds) will spend in their 40s just by looking at how the “trailing” baby boomers (40-to-49-year-olds) are spending now.
This way of looking at things is called “cohort analysis,” and, Bendimerad says, is a nod to the fact that “generations are different and have different behaviors.” Any number of economic and social factors could cause those differences, but you don’t have to be an expert to see them. Anecdotally, we know that people who grew up during the Great Depression spent money less freely than their parents, even when the economy became more favorable. And, as Bendimerad says, “the reasons almost don’t matter. The point is that it happens.”
This research is important, Bendimerad says, because the standard has always been for remodeling expenditures to be divided up and analyzed by age groups. That’s not to say that certain age-specific trends can be ignored — for example, older homeowners of any generation will do fewer large DIY projects than when they were younger, because their age simply won’t allow them to be as active as they once were.
However, what Bendimerad’s cohort analysis suggests is that while there are definite remodeling needs that homeowners encounter as they get older (having children, for example, or aging-in-place), they aren’t the only driver of home improvement spending.
That’s good news for the remodeling industry. Much of the boom that occurred in the last five years has been credited to the large baby boomer generation passing through their 40s and 50s, ages ripe for embarking on remodeling projects. (Bendimerad describes home improvement spending patterns as an “upside-down ‘U’” with the peak of the graph occurring around the 45-year-old mark).
Conclusions drawn from the cohort analysis suggest that baby boomers will continue to be an asset to remodelers even as they move onto the downslope on the backside of that upside-down “U,” because they spend more than their parents did (something we’re already seeing). And Gen Xers will continue the trend because cohort analysis shows that they are spending more than the boomers did at that age. “If [a generation] spends more than their predecessors did 10 years earlier,” Bendimerad says, that stays true throughout their lifetimes, though the percentage by which they spend more doesn’t necessarily remain constant.
Data for remodeling activity doesn’t go back terribly far, so it’s difficult to assign any hard and fast numbers to these trends. However, as Bendimerad points out, cohort comparisons are a widely accepted form of analysis. “There are serious delineations [based on] the way people grow up,” she asserts, and the subsequent effect on spending extends everywhere, including remodeling.