Profits on Tap

AMERICANS SPEND SERIOUS money on their kitchens and baths. As much as $15 billion is spent each year to remodel kitchens and baths. When it comes to new homes, kitchens and baths account for 18 percent, or an estimated $30 billion, in additional new home construction spending, according to Gopal Ahluwalia, NAHB research director. So it's not surprising that virtually every shelter magazine on the newsstand carries a story featuring one of these two rooms; or that builders are paying closer attention to what consumers are looking for.

As consumers become increasingly attuned to style and utility, builders are racing to keep pace—particularly with faucets and fixtures. According to a study by BIG BUILDER magazine, 50 percent of builders say that they concentrate on faucets and fixtures in their options and upgrades programs. In terms of builder attention, the category ranks just below the heavy hitters: flooring, cabinetry, carpet, and appliances.

FINE FAUCETS: Home buyers are sparing no expense in upgrading kitchens and baths. The faucet selection at Los Angeles-based Pardee Homes, for example, is slated for expansion when the builder opens four new design centers in California and Nevada this year. Rather than continuing to simply install a few choices in the model homes, Pardee plans to make a splash with 20 different kitchen faucets from Delta, Moen, and Kohler. In the company's mid-range homes ($560,000 to $600,000), where money is finite, buyers are spending more to upgrade the kitchen than the bath, says Donna Sanders, vice president of options for Pardee. “The kitchen has a different function,” she says. “They know they want a soap dispenser or that they want the spray to go a certain way.” Sanders estimates that 40 percent of the buyers at Pardee's Mulberry Place development in Camarillo, Calif., pony up $1,000 for stainless steel sinks and faucets to go with their shiny kitchen appliances, compared to the 5 percent who enhance their baths. “Once we have more choices, our customers will select more,” she says.

Pardee isn't the only builder catching on. Kimball Hill Homes in Rolling Meadows, Ill., is also gradually devoting more space to bath and kitchen fixtures in its showrooms. “We view them as a profit center,” says Tom Tylutki, regional president of the Midwest and West Coast Florida divisions. In its high-end communities, where home prices range from $700,000 to $4 million, buyers can swap base-price items for $6,000 worth of tub, faucet, sink, and shower upgrades, estimates Paul Radke, vice president of purchasing in the corporate office. Radke says that the 60 percent of buyers who enhance their master baths spend $800 on average.

Buyers are stepping up from a standard package that typically includes Delta Victorian single-lever chrome faucets, a Kohler soaking tub, and a ceramic tiled shower. Kitchens come with a pull-out faucet and a Kohler stainless steel sink. Buyers can raise the style and sensory quotient with brass and satin nickel finishes, jetted tubs and showers, and more expensive tiles. “We've just started offering the jetted showers and have seen some interest already,” Radke says. And in the kitchen, buyers indulge themselves with deep sinks, cast iron sinks, and undermount sinks made of solid surface countertop material.

High Style, Middle Market Manufacturers continually devise new ways to attract home buyers throughout the price and style spectrum. Price Pfister's most recent faucet collection attempts to match fixtures to houses with architectural themes from Modern to Mediterranean, and from starter home to high end. “A lot of homes are focused on a theme, and builders are looking for architecturally inspired designs for their upgrades,” says Staci Quirk, marketing communications manager for Price Pfister.

Over the past year and a half, Kohler and Delta have also bridged some price gaps in the faucets and fixtures continuum. Kohler's Devonshire and Forte collections represent modest price increases from the entry-level line, says Shawn Oldenhoff, marketing manager for the builder channel. Faucets, for example, may increase in $50 increments, and there's a 30 percent charge to upgrade from one finish to another. “We've brought out a complete suite—faucets, accessories, toilets—so builders can sell an entire bathroom package, not just a faucet,” he says.

This year Delta introduced the Michael Graves collection to attract design-conscious buyers with modest budgets—a group that Delta believes represents 76 percent of the consumer market. Delta's jetted shower is designed to appeal to on-the-go households. “It offers the luxury of a couple of sprays in addition to the showerhead at an affordable price,” says Jeff Andress, trade channel manager for Delta.

TOP CHOICE: Brass and satin nickel finishes are among the most popular upgrade choices for kitchens and baths. Water World A conspicuous trend in the industry is the eclectic line of products for powder rooms. Kohler's Oldenhoff says the powder room frequently gets upgraded because it's used for entertaining. Margie Rowe, target market manager at Moen, agrees. “Homeowners can be more daring because [the powder room] is smaller in size and easier to change,” she says. Moen has developed several “far-out designs that consumers can have fun with,” Rowe says, such as a bamboo spout over a water trough with matching accessories.

Faucets with special effects are on the upswing, too. “The popularity of high-arc faucets is growing exponentially,” Rowe says. In a recent Delta study, “homeowners who already had a high-arc faucet said they'd buy another one, and more than half who didn't have one said they'd replace their faucet with one.” Delta's Woodmere collection includes a high-arc pull-down faucet with a button that pauses the stream of water.

As kitchen and bath upgrades grow more popular, the challenge for builders is to find plumbing fixtures at every price point that are too attractive to pass up—and the floor space in which to show them off.