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Think Small, Dream Big

How Premium Home Products Can Benefit from the Downsizing Trend

Gone are the days of starter castles and McMansions. These days, the trend in the U.S. housing market is smaller, smarter, simpler dwellings.

Driving this movement are two distinct demographics: Baby Boomers who need less space (and a lower mortgage) as they settle into retirement, and Millennials who not only can’t afford a large house payment, but also tend to eschew the sprawling suburban residences they’ve grown up in for smaller, modern options in urban settings.

But small floor plans do not necessarily mean IKEA-sized budgets. Many of today’s downsizers are taking what they save on monthly mortgage payments and investing in other areas of the home. Here’s where they’re spending their money — and how marketers can take advantage of it.

Accessible home products and design

Nobody puts Momma in a nursing home. Today’s retirees want to age in place, and even if they’re living in a smaller space, they’re not going to sacrifice any of the luxury or convenience to which they’re grown accustomed. This means first-floor master suites; walk-in showers with elegant built-in seating; open floor plans that can accommodate a wheelchair or walker; and yes, even wood-paneled elevators disguised behind a closet door.

Recognizing this growing market, the National Association of Home Builders (NAHB) collaborated with the AARP, the NAHB’s 50+ Housing Council and Home Innovation Research Labs to develop the Certified Aging-In-Place Specialist (CAPS) program. Remodelers who have earned the CAPS designation have undergone training to help homeowners make design choices that will allow them to live in their homes safely. By teaming with CAPS remodelers, dealers and marketers can gain a direct line to downsizing Baby Boomers through an authority they trust.

Energy-efficient appliances and installed products

Part of the beauty of a smaller home is the monthly utility savings, and many homeowners are capitalizing on that by investing in products like high-efficiency appliances or heating and cooling systems. Plus, with fewer windows in their home, they’re willing to pay a premium for double-paned and other energy-efficient options. In fact, according to the American Housing Survey (conducted every other year by the Census Bureau), 8.6 million homeowners invested in new windows and doors

in 2013, spending nearly $8.4 billion in the process. And according to a 2015 NAHB study, ENERGY STAR-certified appliances are among the top features Millennials want in a home—and they’re willing to pay more for them, as long it’s reflected in their energy bills.

Though energy-efficient products often require a larger upfront expenditure than their standard-efficiency counterparts, dealers and marketers shouldn’t neglect owners of smaller homes. They are just as likely—if not more so—than their McMansion friends across town to spend more in return for a smaller energy footprint. Marketers should promote this savings message before any talk of green living or technological advances.

So although Americans may no longer be enticed by sprawling estates, their homes are still their castles. And while their square footage may be lower, their expectations remain high for what a home should offer them. The dealers and marketers of premium home products may be tempted to overlook the owners of smaller homes, but those who target this demographic will be able to carve out a healthy niche for their business.

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