Karl E. Case’s recent OP-ED piece in the New York Times offers a contrarian view from today’s headlines about the value of home ownership. He makes several good points about why home ownership still makes sense. A good read for builders and manufacturer’s of building materials.
A recent article in the WSJ shows how consumers are shifting their spending away from improving their homes to purchasing high tech toys. Retailers like Depot and Lowes can embrace this shift by featuring the growing number of technology products that they carry. There’s no reason for consumers only to think of Best Buy for technology. Perhaps a “Technology Days” promotion or even their own Geek Squad would gain these sales. They also should more actively reach out to early adopters of technology like the readers or Dwell and Wired magazines.
Existing home sales showed a 7.6% increase to an annual rate of 5.77 million homes in April. Existing home sales are expected to continue to outpace new home sales growth until the employment level improves. Building material manufacturer’s should continue to focus on the remodel and repair market and pay special attention to those fixing up their homes for resale and that key period of the first six month’s after a new home owner moves in. Read the article in the WSJ.
Home prices are down 60% in Las Vegas. There are 9,517 brand new unsold homes. 5,600 homes were repossessed in the first quarter of 2010. And yet builders are working on 1,100 more new homes and looking for land to build more! It makes no sense yet it’s happening. What are you doing as a building material manufacturer to be part of this opportunity? What other unlikely markets are showing activity? Read the whole story in the New York Times.
Total construction spending is down 25% to around of 8.5 billion dollars from the 2006 high of over 1.2 trillion. Now more than ever marketers need to fight for every sale. It’s a great time to be aggressive and grab market share. As the market turns up, those who play to win will find themselves in a much better position. You can read more about the effects of this downturn in the Wall Street Journal.
While reading a review of Meghan Daum’s new book, “Life Would Be Perfect If I Lived In That House” in the New York Times Book Review, I came across an interesting fact. After married couples, single women are the nation’s largest group of first time home buyers.
How many builders and building material manufacturer’s are targeting this important market? Not many from what I can see.
While residential construction has stopped falling, commercial construction continues to fall creating more challenges for manufacturer’s of materials used in commercial new construction. You can read more from the New York Times. Even though residential new construction has stabilized, it’s at a very low number. The opportunity today for both residential and commercial is in retrofit and remodel.
In case you haven’t heard of the famous jam experiment, it’s worth learning about it. A researcher set up a table of jams at a grocery store. Sometimes there were 6 flavors and sometimes there were 24 flavors. More people stopped at the table when it had 24 flavors for a taste. But those consumers who stopped by the table with only 6 flavors were 10 times more likely to make a purchase, 30 percent versus 3 percent. Having too many options may get in the way of making a sale. Are you offering too many options? Can you do anything to make shopping your entire category simpler? To learn more you can now read the book “The Art of Choosing” by Sheena Iyengar, the researcher of the jam experiment. You can read a review from the New York Times book review.
After a rise on construction for the third straight month, building permits have also risen showing a confidence by builders who also believe the government tax incentives will continue to lift sales. At the same time the University of Michigan’s consumer-sentiment index declined from 73.6 to 69.5 at the end of March. While many signs show that the recovery is under way, it’s not a good sign that consumer confidence is dropping, especially for major purchases such as a new home or remodeling project. Read more from this Wall Street Journal article.
Recent issues with Chinese drywall points out an opportunity for builders and manufacturer’s of branded building materials to differentiate themselves from lower cost offerings. Consumers recognize the tremendous risk and cost associated with the use of shoddy materials in construction. Builders and manufacturers should use this to their advantage by reminding consumers of their product quality along with a subtle reference to risks of using lower cost generic products. Handing out reprints of this article from the New York Times could help to educate consumers about the risks of not using quality materials.
