Understanding the Seniors Market

The current population over 55 includes more than 66 million people, according to the American Association of Retirement Communities. They control 80% of all money in U.S. savings and loan institutions and 77% of all privately held financial assets. The mature market is credited with half of all discretionary spending in the United States.

The remodeling industry is hoping for growth and profits from the seniors market. There are plenty of reports that the number of older people is increasing, which explains the interest and activity.

Tapping this lucrative market requires an understanding of the two factors that differentiate seniors from other niche remodeling markets: savings and timing. Savings - available resources - make seniors desirable clients; however, timing issues can make seniors seem like difficult clients. Considering these factors can help you decide whether to pursue this work. How will the work fit, augment or frustrate your sales, design and production departments?

Savings
The statistics cited above make every business owner sit up and take notice. Although older people might have relatively low incomes, their net assets can be considerable. Just think of how many of your neighbors bought their homes in the 1950s and 1960s for less than you can buy a pickup truck now. Think how much these houses are worth now. Encouraging them to convert some of that equity into additional usefulness and value for their homes might turn some of their wealth into your profits.

Many of these potential clients seem to be living as if they have no money, and that might be true. Their savings might be tied up in their house or in investments they consider long-term. They remember all too well the savings admonition not to spend the principle. Reverse mortgages were developed to give older homeowners access to their real estate equity without monthly payments that accompany a standard equity loan. And their popularity is growing: In July 2002, the National Reverse Mortgage Lenders Association announced that the total volume of home equity conversion mortgages, the most popular type of reverse mortgage available today, was on track to outpace the previous year's volume by 64%.

Timing
Timing is the proverbial double-edged sword. Seniors market remodeling clients have basically two speeds: hurry up and wait. Recognizing the speed at which a particular client is operating will greatly influence how you handle the sales process.

Hurry Up
This segment of the niche consists of those returning home from an accident or illness, or those recognizing the onset of limitations. They are in a hurry because they cannot care for themselves or be safely cared for at home any longer. Without home modifications, they will be forced to move immediately. This factor is magnified by a number of issues, including:

• Health professionals who don't understand the time it takes to get remodeling work designed, organized and executed.
• Clients who do not know how well they will recover or how useful the modifications will be.
• Design and selection discussions that might take place in a seniors residence or medical facility and be inefficient because of health or emotional conditions.

Wait
This segment is the same population pursued by the active-adult new home market. Sales professionals in the active-adult market recognize that a one-, two- or even three-year lag between initial lead and completed sale is not uncommon. Few are set up to follow leads for that length of time. The lifestyle of the retiree is totally different from that of the dual-income family with children.

Design/build firms typically promote their timesaving processes when marketing to busy clients, but this is not an advantage to those without time constraints. It is hard to make design progress with retirees. Interruptions for travel and little interest in regularly scheduled meetings make the client a trial for design personnel. In sales lingo, there is no urgency.

Another word for clients with no sense of urgency is planners. Planning could eliminate the "hurry up" issues outlined above. But the conditions and timing that create the "hurry up" scenario are not known in advance and not very exciting to consider. Few of us plan for bad or worst-case scenarios. Planning for them is never a high priority. The effects of aging creep up so slowly, we hardly witness them. Most people don't like to admit they are getting older and - the corollary - that their abilities are diminishing. In short, planning is almost the definition of no urgency - a tough and frustrating sale.

Conclusion
Thorough preparation, with an eyes-wide-open approach to the differences that define the seniors market, will serve contractors well. Knowing what to expect makes the plunge safer.

Next installment: What does seniors housing include? What are different elements of the business? What niches are coming?

Louis Tenenbaum, an independent-living strategist, has years of experience in accessible remodeling and the seniors market. He consults and teaches about design and equipment for independent living, safe caregiving and universal design. He can be reached at 301/983-0131 or through www.louistenenbaum.com.