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Cater to boomers or millenials? Homebuilders caught in between

Erin Holohan HaskellErin Holohan Haskell Posts: 876Member, Moderator, Administrator
I came across this article and am interested in hearing your thoughts. PA builder Tim McCarthy says millenials "are putting more money into their homes and building fairly substantial houses.” What's your take on this? Are you noticing these trends with your customers?
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Comments

  • Robert O'BrienRobert O'Brien Posts: 3,064Member
    What about Gen X ? They and the younger boomer cohort make up the majority of our customers.
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  • hot_rodhot_rod Posts: 11,001Member
    That surprises me about the size of the homes that millennial are wanting. Then again the stats are from the NAHB, maybe they polled the high end Silicone Valley millenials?

    All the articles point to more conservative approach to spending money and investing by millennial. They seem wary of the stock market, Wall St in general, and prefer to invest in real estate in their $$ comfort range, from what I have read, and experienced from raising a millenial.
    Bob "hot rod" Rohr
    trainer for Caleffi NA
    The magic is in hydronics, and hydronics is in me
  • Erin Holohan HaskellErin Holohan Haskell Posts: 876Member, Moderator, Administrator
    Great point about Gen X, @Robert O'Brien.

    It surprised me too, @hot rod. I'm not noticing the new construction trend amongst millenials in the DC area given the cost of homes. I agree with you about millenials preferring to invest in real estate in their financial comfort range. What I am seeing in this area is more folks from Gen X and millenials moving to the suburbs and purchasing older homes and/or fixer uppers. And those often come with aging mechanical systems.

    I see this as a great opportunity for HVAC professionals. So you've got all of these young, first-time homebuyers moving into fixer uppers. Maybe they've lived in the city up until this point and have never been faced with a leaky water heater or an aging, inefficient mechanical system. Maybe the house was a foreclosure that sat vacant for a year or more. Either way, they're going to look for an HVAC professional. And how do they find a pro in their area? How will they find your company?

    First, they'll probably Google and read online reviews or find your company via Find a Contractor. They may join Angie's List. They'll also probably ask their new neighbors for referrals (either in person or through a networking site like Nextdoor.com).

    And they'll also ask their real estate agent for a referral. Chances are, that's how they found their home inspector. Do any of you have strategic partnerships with real estate agents in your area? You can help them educate homebuyers about HVAC via content for their website, blog, or newsletter and they, in turn, can give you referrals. Just thinking out loud here and curious to see if any of you have done this.
    President
    HeatingHelp.com
  • Larry WeingartenLarry Weingarten Posts: 1,398Member
    Hi: It may be a bit off topic, but one way of getting referrals is to specialize. I've done this with domestic hot water. As an example, I got a call from a guy who says "You've got me surrounded!" I say "Huh?" He tells me that he called the local gas company who referred me and the water company who did the same, even though both have a policy not to give referrals. He then called his plumber who told him about me also. Looking back, I average two slow weeks in ten years.

    Erin, I think your point about first time home buyers getting fixers is correct. These people need good tradespeople to work with. I suspect efficiency is more important to them than it was to whoever built those houses also, so it looks like an opportunity for efficiency minded contractors.

    Yours, Larry
  • Harvey RamerHarvey Ramer Posts: 2,168Member
    I use the "find a contractor" on this site and I also advertise on Angies List to reach those customers. So far I haven't had great success with real-estate agents. It seems like they want to use companies for free estimates, that they can use as bargaining chips in the real-estate sale negotiations, without any real intention of work being performed. I had to crack down on that one.
    Ramer Mechanical
    ramermechanical.com
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  • KC_JonesKC_Jones Posts: 4,000Member
    I found the square footage interesting. In the area I live we have a ton of new housing that is bigger, but is still the same value as the small house. The people are buying bigger crappy houses instead of smaller better quality houses. You can see it in the real estate listing 2 houses same price one is bigger. The younger generation seems to look at that number and say "why would I buy the smaller house?". This is also proven by the fact that the worst builder in the area is selling houses like hotcakes. They are filled with the lowest quality of everything. My friend is selling one of these now, his new "energy efficient" windows are just as drafty as my 100 year old windows. I can hold a piece of paper up to his window and watch it flutter in the breeze. It's really sad. People around her don't want value they want square footage.
    2014 Weil Mclain EG-40
    EcoSteam ES-20 Advanced Boiler Control
    Boiler pictures updated 2/21/15
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  • BobCBobC Posts: 4,909Member
    Bigger houses built with flakeboard filled with furniture built with plastic coated MDF - progress!

    Bob
    Smith G8-3 with EZ Gas @ 90,000 BTU, Single pipe steam
    Vaporstat with a 12oz cut-out and 4oz cut-in
    3PSI gauge
  • hot_rodhot_rod Posts: 11,001Member
    There was a trend towards smaller square footage back in 08 for a few years, among the boomer customer at least. Also to higher quality homes and higher efficiency appliances and HVAC.
    Homebuilder polls then showed that customers would rather spend on better equipment instead of granite tops and custom kitchens, for example.,

    Too bad the millennials haven't learned that lesson from their previous generations.

    Across the globe we have a reputation for building cheap, pressboard, throw away homes.

    Something like 50% of the family in Europe will ever build due to the high cost associated with building a structure to last 100- 200 years. The young people I meet talk about 50- 60 year mortgages to buy land and build to the standards required.
    Bob "hot rod" Rohr
    trainer for Caleffi NA
    The magic is in hydronics, and hydronics is in me
  • Erin Holohan HaskellErin Holohan Haskell Posts: 876Member, Moderator, Administrator
    @Larry Weingarten , great point about efficiency.

    @Harvey Ramer, that's interesting and a shame they are not seeing the value in connecting with an expert.

    @KC_Jones, @BobC, and @hot rod, great insight. Do you think they look at the bigger, newer homes and think they will require less maintenance in the long run? Instead of looking for quality and durability, they may be thinking new = best, which isn't always the case.

    I'm also noticing that the younger generation is more likely to buy a home and then move again in several years, rather than making plans to settle in the same home for decades. Are you seeing this turnover at all with your customers?
    President
    HeatingHelp.com
  • KC_JonesKC_Jones Posts: 4,000Member
    Not that it is the norm, but I have friends that are in their mid 30's and on house #7 and say they won't stay in this one forever either. I think the size thing is about status to be honest. It's the "look how big my house is" attitude. Most of the people I encounter like this also think that house problems are normal. Like all houses regardless of quality will start failing after 10-15 years. My cousin had rotten structure in a 7 year old house and thought nothing of it. Quality doesn't seem to be understood, valued or appreciated. This is just my experience and what I see in my area. I am sure we all see something different.
    2014 Weil Mclain EG-40
    EcoSteam ES-20 Advanced Boiler Control
    Boiler pictures updated 2/21/15
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  • ChrisJChrisJ Posts: 9,421Member
    edited February 2016
    BobC said:

    Bigger houses built with flakeboard filled with furniture built with plastic coated MDF - progress!

    Bob

    Not to get off topic, but when I was in the carpenters flake board was talked about a lot, and was considered superior in strength to plywood because the grain alternates randomly.

    MDF also has uses where it is far superior to plywood, such as building speakers because it's denser.

    Products and materials have their places. My bathroom has a Masonite over plaster ceiling. Masonite makes great floor protection during construction, but a very poor bathroom ceiling. I keep a good protective coat of gloss paint on it.
    Single pipe quasi-vapor system. Typical operating pressure 0.14 - 0.43 oz. EcoSteam ES-20 Advanced Control for Residential Steam boilers. Rectorseal Steamaster water treatment
  • FredFred Posts: 7,616Member
    Most of the millenials I know, buy houses with the intent to move in about 5 years. They seem to be much more willing to change jobs and relocate for better opportunites and more family friendly/active amenities. No loyalty to their current city/community. Many don't know their neighbors and really are looking for homes that they can minimize investing any time on or any additional money to rehab/repair, so, in their minds "New is Better". It may well be for a 5 year window in time and based on their life style. Even when factoring in the baby Boomers, I think the national average for how long people stay in their homes, it's around 7 years. That may have stretched a little during the recession but it is on the up-swing again.
  • SWEISWEI Posts: 7,356Member
    ChrisJ said:

    when I was in the carpenters flake board was talked about a lot, and was considered superior in strength to plywood because the grain alternates randomly.

    MDF also has uses where it is far superior to plywood, such as building speakers because it's denser.

    Right, but both suffer mightily when exposed to water.

    Like polyiso foam, OSB has its place, but (at least for me) not in a roof assembly and generally not on an exterior wall.
  • BobCBobC Posts: 4,909Member
    I had my roof stripped and new shingles put on when it was almost 80years old. The roofer remarked that the 1X8 ledger board decking was still in great shape, he said that many of the early 50's plywood sheathed roofs needed extensive decking repairs do to rot problems. The ledger board breathed so any water that got to it could dry out without leading to rot.

    The key is using the right combination of materials for the job at hand. Sheet goods are great but they have to be kept dry.

    I agree about MDF being a good choice for speaker cabinets because it is very dense. I bought some new speakers for the stereo that are about 45" tall and 7" wide, they are built with 3/4" MDF and weigh 55 lbs each.

    Bob
    Smith G8-3 with EZ Gas @ 90,000 BTU, Single pipe steam
    Vaporstat with a 12oz cut-out and 4oz cut-in
    3PSI gauge
  • FredFred Posts: 7,616Member
    edited February 2016
    A whole different perspective than the one I previously posted. Printed in a local paper today. Numbers based on a survey of 5,500 Millenials (25-35) by the Global Financial Literacy Excellence Center at the George Washington University.

    Millennials: ‘They’re living for now, not the future’
    But local millennials show poise as they launch businesses, start careers.

    Too many of the generation known as millennials — those born from the mid-1980s until the late 1990s — are financially troubled, raiding retirements savings and resorting to payday loans services, a recent study shows.

    More than 80 percent of college-educated millennials said they have at least one long-term debt in a survey by national audit firm PricewaterhouseCoopers done with the help of the George Washington University Global Financial Literacy Excellence Center.

    Nearly a third are overdrawn on their checking accounts, the study says. And more than 40 percent are using payday loans, auto title loans and other “alternative financial services” just to get by.

    “They have been brought up to where they have easier access to various different ways to get money, and to lose money, than any other generation has,” said Shannon Schuyler, PwC chief purpose officer and corporate responsibility leader. “They have a lot of opportunities but also a lot of different ways to get themselves into trouble.”

    Millennials are hungry for experiences, eager to dine out and travel when they can. Their average time staying at a single job is just 18 months, Schuyler said.

    “They’re in the standpoint of live-for-now versus live-for-the future,” she said.

    Matt DeNuzzo, 27, co-director of the Dayton Mobile Market and a graduate of Vanderbilt University’s Owen Graduate School of Management, agreed that some young people are likely living with the consequences of poor financial choices.

    “We probably don’t balance checkbooks as well as we should,” he said, quickly adding: “But no one uses checks any more.”

    Student loans are a legitimate issue. But DeNuzzo said college is increasingly expected for an array of careers and has become the “new high school.”

    “That’s why we have so much debt,” he said.

    Not all millennials are struggling. Several area millennials — including a former investment banker and a University of Dayton-educated entrepreneur who owns three local businesses — said it’s up to the individual and their decision skills.

    Briana Snyder, 27, owns the downtown Dayton boutique and party shop, Confetti. She also is a wedding photographer, and she’s working with Max Spang, also 27, to launch a corporate photography and video business.

    Snyder said she took a single finance class in high school. But she graduated from the University of Dayton in three years and hasn’t used a credit card in her entire life.

    “Anything I know I had to figure out,” Snyder said.

    A friend and fellow millennial, Jenna Burnette, 29, says she steers clear of the credit card trap. “My brother and I call it ‘funny money,’” she said.

    ‘They saw what poor financial planning looks like’

    Alisa Livesay, a UD lecturer in finance, a certified public accountant and a certified financial planner, has taught millennials for years.

    Young people today are accustomed to the world of online payments and debit cards, and too many are unfamiliar with how to reconcile checkbooks with banking statements, she said.

    “They absolutely would have no idea how to do a checkbook because checkbooks are gone,” Livesay said.

    But Bill Wood, a certified financial planner and Wright State University lecturer and director of the university’s Financial Services program, said some millennials have learned lessons from older generations.

    “There’s no question that student debt is probably the single most pressing financial issue for millennials,” Wood said. “I think that’s probably true.”

    But there are federal programs in place to allow debt to be paid “in a more forgiving way”, if not forgiven altogether.

    Outside of student loan debt, however, Wood is not certain millennials are different than any other generation when it was young. This is a generation that likely well remembers the Great Recession of 2007-2009, he said.

    “They saw what poor financial planning looks like,” he said.

    ‘Doing my own thing is not that big of a risk’

    Besides running a trio of businesses, Snyder is working with like-minded friends on a “mobile market” for areas of Dayton lacking grocery stores with fresh fruits and vegetables.

    For Snyder, every penny matters, and so does every minute.

    “There are very few days where I don’t work at all — on my days off, I usually spend at least a little time catching up on emails, orders for the shop,” she said.

    Burnette has started the Playground Theatre with her boyfriend, Christopher Hahn, 25, and she has started to work at Confetti, as well. (Hahn is a web designer at Catapult Creative, a Dayton web design and marketing company launched by millennials.)

    As a non-profit, theater revenue is closely monitored, Burnette said.

    “We’re so new, essentially all the revenue we bring in goes immediately back into the next shows,” she said. “We do have to keep track of things pretty well.”

    If it sounds like a lot of work, it is. But these millennials say it’s worth it.

    “Me doing my own thing is not that big of a risk,” Snyder said.

    “Sometimes we will take less money to do what we love,” Burnette said.

    --------------------------------------------------------------------------------


    Millennials by the number

    80: Percentage of college educated who said they carry at least one source of outstanding long-term debt.

    50: Percentage that don’t believe they could come up with $2,000 if an unexpected need arose within the next month.

    30: Percentage who are overdrawing on their checking accounts.

    53: Percentage who carried over a credit card balance in the last 12 months.

    36: Percentage who have a retirement account.

    *** Numbers based on a survey of 5,500 Millenials (25-35) by the Global Financial Literacy Excellence Center at the George Washington University.
  • LanceLance Posts: 102Member
    The next generation that fails to learn from their mentors or the past will have to learn it all over again the hard way. Unfortunately since we are all born stupid and the information amassed by our Human race keeps growing, at some point we will be unable to learn enough unless we can live longer and healthier and even then at some new point another limit will be set further down the road. It is any wonder why the top 1 or 2% are the top 1 or 2%? Hence the birth of the specialists. Who do you trust with your wallet?
    On the other hand there is nothing wrong with living a simpler life. In fact it many ways it is preferred.
  • I am not sure about the quality of construction, but reports over the past few years seem to indicate the complete opposite of much that seem to be reported elsewhere. One is that the traditional picture of boy meets girl and then they get together and move out to the suburbs is not true anymore. About 2/3 of the largest cities in the US are seeing the core city population growing faster than the surrounding suburbs. In general, it appears younger generations are looking for more urban lifestyles which include access to many types of unique foods, entertainment, etc. Use of mass transit systems in cities is expanding, since large segments of the younger families or couples own only one or no cars at all. I imagine the economic mess that the younger generations have inherited is causing them to seek lower cost lifestyles, which would rule out suburban living with massive amounts of money going toward automobiles ( which is typically more than what is spent on a home during a lifetime). Some couples I work with here in Chicago plan on moving to the burbs when thier kids hit high school and then move back right after they're done ( there are good public elementary schools in Chicago, but almost no high schools) . We are now seeing school age children in buildings where there has not been any children for nearly 20 years. More and more of the rough neighborhoods are turning around and seeing old buildings being renovated and a lot of new housing going up. This may just be Chicago, but the statistics seem to be pointing this direction nationally. Us steam specialists have a huge opportunity right now in cities.
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  • Erin Holohan HaskellErin Holohan Haskell Posts: 876Member, Moderator, Administrator
    Great points, @The Steam Whisperer, especially about the huge opportunity for steam specialists.
    President
    HeatingHelp.com
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