Monday, February 18, 2008

How to combat falling consumer confidence

The University of Michigan’s consumer sentiment index tumbled to 69.6 in its preliminary February reading from 78.4 last month, marking its lowest point since February 1992 when the economy was emerging from a recession. The component of the index that gauges consumers’ expectations — a possible sign of their willingness to spend — dropped to to 59.4 from 68.1. Time will tell whether the infusion of stimulus rebate checks will counter this trend. Regardless, now is the time for the industry to promote the value that landscaping provides in increasing perceived real estate values. A recent study by the S-1021 Multi-state research committee provided key findings regarding the effects that landscape design sophistication, plant size, and diversity of plant material has on consumer perceptions of home value.

Design sophistication accounted for 42% of the value added to the home, so clearly doing more than foundation plantings yields a greater return.

Plant size accounted for 36% of the value added to the home, so larger plantings translate into greater value.

Diverse plant material accounted for 22% of value of the value added to the home, so it appears that having many large numbers of different plants was not as important.

Adding one or two island beds (increasing design sophistication) can alone add 2% to the perceived value of the home.

Although a small investment (less than $250), colorful annuals and perennials added nearly $1000 to home value; returning 400% on the investment.

Moving from the least valued landscape to the most valued landscape, perceived home value increased, on average, 8.6% across all states included in the study.

A landscape is a good investment, yielding a greater than $1 return in home value for every $1 invested in the landscape.

Landscapes are one of the only home improvements that increases in value (and size) over time. Other renovations (e.g. bathroom, kitchen) typically yield less of a return than the amount invested.

Clearly, installing more than foundation plantings yields a greater return for consumers. Curvilinear beds are effective design elements in adding value to the home.

Obviously, this is vital information for landscape firms and retail garden centers to include in their marketing and sales literature. To view more details of this study, click here.

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