The Power of Rationalization in Remodeling

May 9, 2011

The purchasing decisions we make every day aren’t about logic. We’re constantly making emotional decisions to buy or not buy something, whether it be a candy bar, an iPad or a new car.
Oh sure, we can come up with plenty of perfectly good reasons why we do these things (“It’s OK, chocolate has antioxidants” or  “I’ll be so much more productive if I have a tablet” or “It gets much better gas mileage”), but the reality is it’s all rationalization.
Ernest Jones coined the term in 1908 and other psychologists have built on the theory since then. Basically, humans are wired to make emotional decisions, then justify them with so-called logic. We’re not good at being rational, but we’re great at rationalizing.
And that’s a big old double-edged cliche for the housing market in general and remodeling specifically.
Logic flew out the window during the housing boom and plenty of remodelers got fat on the proceeds. $300,000 kitchens? Sure! $150,000 bathrooms? Makes sense to me! People were keeping up with the Joneses, spending vaporous home equity and justifying it. (“It’ll increase resale value!” “Home prices never go down!”)
Now, emotion has people running the other way. It’s hard to rationalize spending money on a new home or a remodel right now. Prices are still falling, foreclosures are rampant and nearly a quarter of homeowners with mortgages are underwater. (Read that sentence and it doesn’t seem like a real logical idea, either.)
The good news is that most Americans still want to believe in the dream of homeownership. They’re just looking for that “logical” reason to do it.
A recent Pew Research Center study found that 81 percent of Americans still believe a home is the best long-term investment a person can make.
That’s in a climate where home prices are down 31 percent from the market peak, according to Case/Shiller, and down more than 50 percent in many markets. Eighty percent of respondents in the same survey said that homeownership is either an extremely or very important long-term financial goal for them.
As a remodeler, you have to appeal to that emotion, but — more than ever — wrap it all up in a veneer of rational, logical thought.
It’s no coincidence that the remodelers that have been doing best in this downturn are those who can point to a “return” on the remodel in reduced energy bills or tax credits, whether it be from new windows, alternative energy or better insulation.
It’s a delicate balancing act, but one that has to be mastered in this new reality.

Jonathan Sweet is the editor in chief of Professional Remodeler, an award-winning trade publication for remodelers and home improvement contractors. He started his career covering homes and small businesses at a daily newspaper and has spent more than a decade writing for several construction trade publications including Qualified Remodeler, Construction Pro and Concrete Contractor+Jonathan Sweet