I read recently that in a survey commissioned by Move – 62.5% of Americans think of their home as a place to live rather than an investment.  I have no data to back this next claim up, by my guess is that only a couple of years ago that the results would have been inverted.  The commercial contractors among us deal with recovery periods, payback metrics, etc. on a daily basis.  Many business customers use payback metrics to determine what features they will add in a facility. 

What the results tell me this time is that the expectation for cashing in on one’s home have evaporated.  Springing for a gourmet kitchen is now a luxury and not an investment.  A steam sauna (and the five times a year it is turned on) in the Master Bath might not be worth the extra cost.  Yep, as homebuilders and custom remodelers, we are back to the process of selling basic shelter and not dreams.  Or are we?

It is too easy to dismiss the trends of today as truths of tomorrow.  Look at where believing the axiom that home values never decrease took us!  More than ever, we have to become part psychologist and understand what drives our markets and clientele.  In order to do that, especially in a difficult market, we have to tie the “wants” together with the “shoulds”.  I want a new Master Bath, but I should insulate and put in an on-demand hot water heater first.  I want a new kitchen, but I should upgrade my legacy furnace – and so on.  Do your best to understand your clients “wants” and the rationale behind their “shoulds”  If you can make these two meet in reasonable harmony, you have a potential project. 

I have never approved of the practice of telling a client how much more their house will be worth with a renovation – this is misleading at best and we are making an effort at dispensing knowledge most of us are not expert in – but those projects that add long term value to your client have a better shot at success than vanity projects alone.  Do your best to tie the vanity (want) with long term value (should).  This isn’t groundbreaking or new, but as sales become harder to come by, understanding the psychology of consumerism can be helpful.