What the future holds

I spoke at the NAHB’s Green Building conference on Monday and couldn’t help but notice the crowd size was about 40% of what it was four and five years ago.  That’s likely more a statement about the shape of the building industry itself, rather than a vote of no confidence for green building.  What I also noticed was that those who are hanging in seem to be motivating themselves to hang in by locking onto some key beliefs.

That makes perfect sense.  For any of us to continue working at something that’s hard and obstacle-laden we must cling to beliefs of a better, brighter future.  I’m just a little concerned that some of the beliefs may turn out to be false or too broad. I hope not.  But here they are, along with a little advice for the industry:

• “When a gallon of gas hits $6-7 nobody will want to live as sprawled out as they do now.” This is a logical argument…but we must remember that sometimes people defy logic.  Gas may hit $10/gallon and folks may still want to live in the suburbs because it’s closer to family, because it’s more serene/away from the hustle and bustle or because housing prices in the ‘Burbs are more affordable than prices closer to town.

• “People are longing for a sense of community…so we must build self-sustaining communities that include places to work and play…” There is definitely a trend towards community, just as there is a trend towards urban revitalization, per the above.  But we’re currently talking about a minority of Americans who are really aching to change the way they’re living.  So broad assumptions can be really dangerous and, potentially, financially devastating for the builders who count on them as their way forward.

My advice is this:  do the market analysis on the front end.  Determine — via surveys or secondary research — how big the market actually is before you build a new Livable Community or Revitalize an entire block of your downtown.  Do not for a second assume the market is Everyone, because it’s absolutely not.  Also, check out your competition and be sure you’re not going to be one of many builders saturating the market with this idea.  There may not be enough customers to go around.

Also remember this:  the Americans most interested in buying greener homes fall into our Actives segment.  That’s about a quarter of the population; however they’re not all good targets.  The Actives who are actually the most viable prospects for a green home/green community/downtown loft condo skew younger (25-35) with a household income of $50,000.  Part of what makes them the most viable prospects is their ideology. They personify the assumptions the industry is making right now about the future.  The other thing, though, is more practical:  they’re currently renters.  So they don’t have a house to sell in order to buy a greener place to live, which I think makes them a more desirable prospect thana Boomer Active who has a $200,000 household income and can afford a house with more green features…but can’t pull the trigger because she can’t sell her home in this economy.

So, yes, some of the assumptions about the future may be right on.  Just remember that the assumptions currently apply to a small segment of the population, and you’ll need to make sure you target them with the right offer — i.e. a greener home and community at a price point that makes sense for their household income.