Jo Chappell-Theunissen presents her study of the home building industry at the recent GAMA convention.
The building industry continues to be the brightest star on the economic horizon. Housing starts in this country remain strong. Research from the National Association of Home Builders (NAHB) shows an approximate number of 1.7 million new home starts in 2003, with an estimation of similar new starts for this year.

These numbers demonstrate continued growth during a period when some other businesses and markets are stagnant or actually declining, leading to questions which arise as to how these numbers impact our economy and our nation's populace. For instance:

  • How much are Americans spending on new homes?

  • Who is buying all of these new homes?

  • What are the changes we're seeing in the contemporary American home?

    Let's see.

    Space The Same, But Prices Are Not

    The median and average prices of new homes have more than doubled in the last 20 years. In 1990, the median price of a new house was just under $150,000, while in 2003 the median price was just under $230,000, showing an increase of almost 60 percent. However, this escalation in cost is not attributable to our houses becoming bigger and more elaborate.

    In 1990, the average home was comprised of approximately 2,080 square feet of living space, and in 2003, 2,270 square feet. That's an increase of just over 8 percent - not necessarily a big difference. So, although our costs are increasing significantly due to keeping pace with the cost of living as a whole, the average American hasn't really changed the size of their living space.

    But there are real changes that have become readily apparent in new houses. The biggest change we see is due to the way Americans live. The formal living room has become a thing of the past. Spaces are more open now, with the kitchen and family room becoming a single shared space to better accommodate family living and entertaining.

    And Americans want "new." New home buyers aren't moving things from one house to another. Ninety-five percent of new homes include installation of new ranges, cook tops, and ovens, and 19 percent include new washers and dryers.

    As we enter an age of higher stress levels within our day-to-day lives, Americans are looking for atmosphere, elegance, and ease of maintenance within the confines of their homes. Fifty-four percent of new homes include at least one fireplace. Most new homes include a dedicated laundry area and bigger and more numerous bathrooms. High-tech items - such as structured wiring, security systems, and computer-controlled appliances - are all turning up in higher-end executive housing and will soon be filtering down to the mainstream marketplace as well.

    Today's Home Buyer

    If we try to examine who today's home buyer is, we find a variety of consumers.

    Anyone who's currently involved in business today is well aware of the baby boomers and their serious impact on the marketplace. There are over 63 million Americans aged 55 or older right now, with an additional 3.4 million added to that number each year over the next decade. The sheer numbers alone tell us this is a group that cannot - and will not - be ignored.

    The residential building industry is feeling the impact of this demographic and seeing a growing demand for active adult housing that meets the needs, demands, and lifestyle of this generation. The boomers have been making their impression on American culture since the late 1960s.

    Now that they have entered the 55-plus market, the business world needs to take even more notice. They are wealthy and control about 70 percent of the nation's wealth, as well as approximately 50 percent of all discretionary in-come. However, only 24.2 percent of new custom home buyers are over the age of 55.

    A newer and less often discussed market is Generation X, otherwise known as the "30-somethings." Instead of finding them content living in rented apartments as in days past, we're seeing a significant increase in the number of 30-year-olds investing in their own homes.

    In 2003, the American Banking Association (ABA) reported approximately 56 percent of Americans between 30 and 39 had purchased their own home, while 23 percent of Americans between 21 and 25 have bought a home.

    The trick here is to find a way to provide these less-affluent home buyers houses they can afford. This group, along with a vast number of blue collar and working Americans, is creating a possibly frightening trend in U.S. housing.

    According to Federal statistics, currently one in four families spends more per month on housing than the federal government considers affordable and appropriate. In other words, they are currently spending over 30 percent of their gross income on housing.

    Regulatory and natural constraints on land use are driving up land costs in and around the nation's metropolitan areas, restricting development of affordable housing.

    As a result, in high-growth, major metro areas, thousands of people find it is necessary to commute up to 100 miles back and forth to work because of the lack of affordable housing in the communities where they work.

    ‘Green' Is Good

    But even in the midst of areas of adversity, there are so many bright spots in the building industry. One of the most exciting trends we're seeing is "green building." This new emphasis on conserving resources may be the most significant development in home building in the past three decades.

    This is nothing less than a quiet revolution in the way homes and communities are being planned and constructed.

    New homes today are more than 100 percent more energy efficient than homes built 30 years ago due to significant improvements in the general construction process. And the research and development that has occurred within appliance manufacturing has been phenomenal in generating energy-efficient appliances and in making our energy use clean and effective.

    As a custom homebuilder, I believe those of us in building and its related industries are currently privileged to do business in the greatest industry out there, at the best possible time. The American dream of home ownership is probably as strong as it's ever been.

    We've passed the time of "flash" and "glitter," and home buyers are back to looking at quality and substance. Most Americans have learned the hard lesson of "you get what you pay for," and although budget will always be an integral part of the decision-making process, it seems as though we've finally come to a sensible time when people no longer make their choices based on "keeping up with the Joneses."

    Instead, they now plan their homes around their own lives, how they live, how they entertain, and what their families need.

    Perhaps it can be said that the home building industry has once again entered the "Age of Reason," and I, for one, am grateful for the change.

    Chappell-Theunissen is president of Howling Hammer Builders Inc., Mt. Pleasant, Mich., and 2004 chair of the National Association of Home Builders (NAHB) Women's Council. Theunissen made the presentation above at the recent 2004 convention of GAMA, an association of appliance and equipment manufacturers. Chappell-Theunissen can be reached by e-mail at

    Publication date: 06/28/2004