Using Psychographics to predict the needs and wants of a changing housing industry
By MARY COOK
A new year always brings s a new set of trends. This year, one trend stands out above all others in the housing industry—psychographics, the study and classification of people according to their attitudes, aspirations, and other psychological criteria.
Why now? We chalk it up to uncertainty, the only constant in the housing industry today thanks to profound societal changes that are upending conventions about how and where we want to live. As commercial interior designers that specialize in housing development, we’ve worked on every type of residence of late—from micro-apartments and co-living spaces, to green homes and wellness communities. What’s more, we see generational housing decisions becoming more diverse than ever, which further complicates the development process.
How so? Boomers are just as likely to favor micro-apartments and co-living options as luxury condos, or even have several residences in different kinds of communities. Millennials, contrary to popular belief, aren’t too cash-strapped to purchase homes; 36 percent have done so—typically by age 31. Many are increasingly buying luxury homes, as almost 9 percent of millennials have household incomes of $350,000. Yet at the same time, Millennials are also discovering co-living through services such as Medici Living Group and Bungalow.
And who knows what Gen Z, those born between 1997 and 2015, will want? They’re just starting to explore their options, and we’re keeping our eyes on them. We do know they’re very different than Millennials, but aren’t sure how that will translate to housing. Given that they are now the largest U.S. cohort at 26 percent of the population, we need to get know they well so we get it right.
What Kinds of Homes to Build?
Clearly, all of these types of housing have crossover appeal, which begs the most basic question for builders and developers: What’s the most profitable type of project to construct on a parcel of land? This conundrum is exacerbated by today’s high-stakes environment, where labor and material costs impact profitability, and absorption rates don’t always progress as expected. To say missteps are expensive is understatement.
This shows how critical it is to match properties to their most likely target(s) long before a project breaks ground. For decades, demographics have been the tool of choice to do so. Quantitative data such as gender, age, income levels, marital status, educational attainment, race, and ethnicity has given us a way to make assumptions and draw pretty good generalizations about what prospective homeowners or tenants will need in their residential settings.
But pretty good isn’t good enough today, not only for the reasons mentioned above but also because innovation, and the technologies it breeds, are transforming everything about our society—often faster than we can adapt. Demographics allow us to only dig so deep. Instead, it’s time to take a page from the hardcore world of marketers with psychographics, notes the Harvard Business Review (HBR).
Psychographics vs. Demographics
Unlike demographics, psychographics are qualitative rather than quantitative. They measure consumers’ “attitudes and interests rather than “objective” demographic criteria, and provide deep insight that complements what we learn from demographics,” the HBR explains. In contrast to demographics, psychographic data look at consumers’ values, opinions, attitudes, interests, lifestyles, aspirations, and other relevant psychological criteria.
Does is work for real estate? While it arose out of the consumer products industry, it’s “intimately tied to real estate value,” says Mark Stapp, Executive Director of the Master of Real Estate Development Program at Arizona State University.
While demographics are invaluable in determining the feasibility of a site, psychographic data helps differentiate between a good location and a great one. More than just attitudes and interests, they also shed light on resident’s values and lifestyles, which are informed by where they’re from, family background, culture, type of education (as opposed to level of education), and more.
These qualities dictate where and how people will live, what they need in their residences, and how we can design spaces that are both transmutable and transformative. The latter is critical because communal and shared spaces must appeal to many, and at the same time be flexible and multi-functional enough to accommodate the needs of residents that have similar lifestyle needs and values but different proclivities.
“With the help of psychographics, communities are becoming more differentiated today, focusing on wellness, active life, sustainability, and more”.
For instance, as insights about Boomer and Millennial preferences on health, wellness and sustainability have informed our design work for communal spaces, amenities and model homes nationwide, we’ve found that wants and needs vary geographically but intersect generationally. Understanding how popular preferences are in certain geographic areas has helped the project teams we work with make critical decisions about how to allocate and outfit space, and also helped formulate the philosophical underpinnings for entire developments. With the help of psychographics, communities are becoming more differentiated today, focusing on wellness, active life, sustainability, and more. They also have appeal to several generations at the same time to foster diversity and inclusiveness. Delivering good design is also paramount. Psychographics are not a panacea, but for now they are the closet thing we have to the proverbial crystal ball.
Mary Cook is the founder and principal of Mary Cook Associates, a full-service commercial interior design firm that focuses on the homebuilding and hospitality industries. She may be reached at www.marycook.com