Amid fears of a double-dip recession or -- even worse -- a 1930s-style depression, Commerce Department reports of a 12.4 percent decline in new home sales in July has sparked fear in all segments of the economy. Reportedly, this marks the worst new home sales rate since 1963. If this trend toward decreased demand continues, it will lead to fewer jobs building homes, selling homes, and manufacturing and selling home-related products.
However, a new survey among high-income consumers gives reason for cautious optimism. "As Unity Marketing's research has consistently shown, where the affluent consumers go, the rest of the market is likely to follow. And the affluent consumer market shows an increase in plans to buy or build a new home in the coming year," says Pam Danziger, president of Unity Marketing and author of the new trend report, Home Is Where the Style Is.
"When we look at the attitudes of affluent consumers toward building or buying a home, we see a statistically significant increase in expectation to do so during the next twelve months as compared to attitudes during 2008,” says Danziger. She refers to a new survey conducted July 3-8, 2010 among 1,349 luxury consumers (avg. income $306.7k) which found 11 percent of affluent consumers surveyed plan to build a new home as a primary residence in the next year, up from only 3 percent in 2008. Likewise, there is a statistically-significant increase among affluents to buy or build a second or vacation home or to buy an existing home as a primary residence in the coming year when compared with a similar survey conducted in July 2008.
"Not only do the market-leading affluent consumers express an increased likelihood to buy or build a home, but those consumers at the highest income levels ($250k and above) have a stronger intent to build a new home in the coming year than those with incomes from $100k-$249.9k," Danziger says.
"This points to an important strategy for home builders like Toll Brothers and others that target the more affluent segments of the market: Make options available at various price points and luxury levels, and be sure to point out your range of good-better-best. Those consumers most likely to buy will gravitate to the ‘best’ option by appointing their new homes with the finest luxe options,” Danziger concludes.
About "Home is Where the Style Is"
This new trend report is the result of a special investigation into how affluents decorate and remodel their home conducted in association with Unity Marketing's 2Q2009 Luxury Tracking Survey, conducted July 3-8, 2010. A total of 1,349 affluent luxury consumers were surveyed about their major home decorating projects in the past year. (avg. income $306,7k and net worth $15.2 million; age 44.8 years; 45 percent male/55 percent female). The results of this investigation are compared with results of a similar survey conducted in 2Q2008.
Key Finding: The market for home luxuries is hot right now
The market for luxury home is particularly strong right now, based on the survey results. A majority of affluents (52 percent) surveyed were involved in a major home remodeling or decorating project in 2009 and first half of 2010 and they spent on average 40 percent more than home remodelers surveyed in 2008. An equal percentage plan to make home changes in the second half or 2010 and through 2011. This report gives home marketers the ammunition to strike while the iron is hot.
The survey questions were designed to help luxury home marketers and brands understand their affluent customers' needs and motivations in home decorating better in order to grow their businesses, included:
- Luxury lifestyle, i.e. do you choose most often the good, better, best option or is luxury just not a part of your lifestyle?
- Involvement in major home projects, including remodeling, redecorating, buying new home, buying second home, in past year or plans for next year;
- Amount spent or plan to spend on major home projects;
- Room or rooms in home involved in major home project or planned for major projects;
- Factors that influenced home purchases, such as value, store, internet research, designer/decorator recommendations, etc.;
- Sources for home shopping rated by whether the source is a regular, occasional or infrequent shopping destinations.
- Sources include department stores, home furnishings stores, discount store, internet, mail order, home improvement store, furniture store, specialty appliance dealer, interior decorator/home design store, mail order or television shopping;
- Use of a decorator or designer, including type of decorator, importance of services, such as access to furnishings not available elsewhere; expertise in combining colors; saves time; saves money, etc.;
- Favorite styles for home decorating; and
- Attitudes about home decorating and home styles.
Special Feature: Four different luxury consumer personalities are identified, based upon a psychographic analysis of affluent's attitudes and motivations in home decorating. Learn how to sell more effectively to each of these distinctive luxury home personality consumers.
About Pam Danziger and Unity Marketing
Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer. She is president of Unity Marketing, a marketing consulting firm she founded in 1992. Pam received the Global Luxury Award for top luxury industry achievers presented at the Global Luxury Forum in 2007 by Harper's Bazaar.
Pam gives luxury marketers "All Access" to the mind of the luxury consumer. She uses qualitative and quantitative market research to learn about their brand preferences, shopping habits, and attitudes about their luxury lifestyles, then turns these insights into actionable strategies for marketers to use to reach these high spending consumers. Unity Marketing is the voice of the luxury consumer for such clients as PPR, Diageo, Tempur-Pedic, Google, Swarovski, Constellation Wines, Luxottica, Orient-Express Hotels, Italian Trade Commission, Marie Claire magazine, The World Gold Council, and The Conference Board.
Follow Pam on Twitter @ www.twitter.com/PamDanziger
She is currently working on a new book, Putting the Luxe Back in Luxury, to be published in late 2010 by Paramount Market Publishing. Her other books include Shopping: Why We Love It and How Retailers Can Create the Ultimate Customer Experience, published by Kaplan Publishing in October 2006; Let Them Eat Cake: Marketing Luxury to the Masses—as well as the Classes, (Dearborn Trade Publishing, $27, hardcover) and Why People Buy Things They Don't Need: Understanding and Predicting Consumer Behavior (Chicago: Dearborn Trade Publishing, 2004).