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Hearth & Home October 2014

LHD50SS Swarovski Limited Edition linear direct-vent fireplace from Napoleon.

Gas: Heart of the Hearth — Part II

By James E. Houck

This is the second of a three-part series on gas-fueled appliances in the residential hearths of North America. It focuses on socio-demographics, regionalism and consumer attitudes.

That well-worn saying is attributed to the Roman author, naturalist and philosopher Gaius Plinius Secundus, a.k.a. Pliny the Elder, who died in 79 AD.

It looks as if Pliny got it right almost two millennia ago. According to the U.S. Census Bureau’s 2011 “American Housing Survey” (AHS), 35 percent of all occupied U.S. housing units have fireplaces. Particularly important for the sale of hearth products is that even a higher percentage of owner-occupied housing units have fireplaces (46 percent), many of which may be upgraded, retrofitted or may require maintenance or repairs.

More significant for the future sale of new fireplaces is the fact that 51 percent of new single-family homes completed in 2013 have one or more fireplaces and there is no reason to suspect that this percentage will change appreciably in future new single-family homes.

All these percentages seem encouraging, but here’s a different view of the same facts: 54 percent of existing owner-occupied housing units and 49 percent of new single-family homes completed in 2013 do not have fireplaces. Further, there is strong regionalism in fireplace ownership in the U.S. For example, only 28 percent of occupied housing units in the Northeast census region report having a usable fireplace in contrast to 44 percent in the West census region.

So what kind of consumer preferences and desires should be addressed to increase market penetration, as well as market share, within this already large existing marketplace? Where are the hottest markets? There is enough information out there from the various surveys and studies to get a reasonable understanding of what is important to consumers and where they are. Where Are the Consumers? There is a simple answer to this question. Most fireplaces and their owners/buyers are primarily in single-family homes in the suburbs. In 2011, 55 percent of occupied housing units in the suburbs of metropolitan statistical areas (MSAs) had one or more fireplaces (of any kind), in contrast to only 22 percent for central cities in MSAs and 21 percent for areas outside of MSAs (U.S. Census Bureau, “American Housing Survey”).

Percentage of Households with Usable Fireplaces and Heating Degree Days (HDDs) by MSAs

 

47 MSAs

It’s a common misconception that there are more fireplaces and commensurately more fireplace consumers in colder areas of the U.S. In the United States there is no correlation between heating demand and fireplace ownership. Most places in the U.S. have at least some cool/cold winter days when the use of a fireplace is desirable.

Where Are the Consumers?

There is a simple answer to this question. Most fireplaces and their owners/buyers are primarily in single-family homes in the suburbs. In 2011, 55 percent of occupied housing units in the suburbs of metropolitan statistical areas (MSAs) had one or more fireplaces (of any kind), in contrast to only 22 percent for central cities in MSAs and 21 percent for areas outside of MSAs (U.S. Census Bureau, “American Housing Survey”).

Similarly, the Hearth, Patio & Barbecue Association’s (HPBA) 2012 “Hearth Consumer Research” found that 63 percent of the residences with gas fireplaces were in the suburbs, 15 percent were in rural areas, and 22 percent were in urban areas. HPBA’s 2012 report also states that 79 percent of existing gas fireplaces are in single-family detached homes. New fireplaces are also predominately installed in single-family houses.

According to the U.S Census Bureau, 290,000 fireplaces were installed in new single-family houses completed in 2013 in contrast to only 6,000 installed in new multifamily units. For completeness, it’s interesting to note that less than three percent of the total usable fireplaces in the U.S. in 2013 were in manufactured/mobile homes.

Metropolitan areas with large suburban populations are clearly the marketplace for both (1) new fireplace installations and (2) for the retrofitting of existing fireplaces, including the installation of gas log sets into existing fireplaces. For many metropolitan areas, recent data on single-family building permits available from the National Association of Homebuilders (NAHB), coupled with the fraction of already constructed, single-family, detached housing units that have a useable fireplace (from the U.S. Census Bureau “American Housing Surveys”), allow for estimates of future market opportunities.

Projection of Annual Future New Fireplace Sales for
New Construction by Metropolitan Area
– Top Five Areas*

Rank Metropolitan Area 2013 Single-Family Building Permits Percent of Existing Single-Family Detached Housing Units with Usable Fireplace Projected Annual Sales of Fireplaces for New Construction§
1 Houston MSA 34,500 58% 20,010
2 Combined Dallas and Ft. Worth MSAs 23,500 70% 16,450
3 Atlanta MSA 14,800 72% 10,656
4 Southern California** 16,600 57% 9,462
5 Washington DC MSA† 13,300 70% 9,310

*Seattle MSA ranks 6, Charlotte, NC MSA 7, Phoenix MSA 8, Denver MSA, 9, and the California Bay Area 10. Las Vegas may rank in the top 10 with 7,100 building permits for single-family homes in 2013, but there are no fireplace data available that are needed for an estimate of new fireplace sales.
**Sum of Los Angeles/Long Beach MSA + Anaheim/Santa Ana MSA + Riverside/San Bernardino MSA + San Diego MSA
† Includes counties in MD, VA and WV
§Estimate is product of (2013 Single-Family Building Permits) X (Fraction of Existing Single-Family Detached Housing Units with Useable Fireplace)

Ranking of Potential Fireplace Retrofitting
and Gas Log Set Installation Markets by Metropolitan Area*

Rank Metropolitan Area Occupied Housing Units Reporting a Usable Fireplace§
1 Southern California** 2,988,200
2 Combined Dallas and Ft. Worth MSAs 1,334, 300
3 California Bay Area† 1,127,900
4 Combined New York City and Northern New Jersey MSAs 1,116,500
5 Atlanta MSA 1,112,800

*Chicago MSA ranks 6, Washington DC MSA 7, Houston MSA 8, Seattle MSA 9, and Detroit MSA 10
**Sum of Los Angeles/Long Beach MSA + Anaheim/Santa Ana MSA + Riverside/San Bernardino MSA + San Diego MSA
† Sum of Oakland MSA + San Francisco MSA + San Jose MSA
§Occupied Housing Units Reporting a Usable Fireplace, data from U.S. Census Bureau’s “American Housing Surveys”

These estimates can be made as it’s reasonable to assume that, for a given metropolitan area, the fraction of new single-family homes being built with fireplaces will be similar to the fraction of existing single-family homes with fireplaces, and that the total annual number of building permits usually only changes a small amount from year to year.

The fraction of existing single-family homes with fireplaces is a reflection of the “fireplace culture” of a given area and varies from metropolitan area to metropolitan area. While there are certainly some identifiable socio-demographic factors, what drives this difference in fireplace culture appears to have numerous nebulous causes.

For example, it has been said that fireplaces are more popular in ranch- style houses more common in the West, that they are more popular in marine climates such as Seattle and San Francisco that do not have particularly high heating-degree day levels but do have frequent cool and damp days extending into the summer, and that fireplaces are simply more of a Western “thing.”

Whatever the complex blend of causes is for a given metropolitan area, the fraction of existing single-family detached houses with fireplaces provided in U.S. Census Bureau “American Housing Surveys,” when multiplied by the most recent number of annual building permits, provides for a good estimate of next year’s fireplace market size.

Similarly, opportunities for retrofitting existing fireplaces, including installing gas log sets into existing wood-burning fireplaces, can be assessed directly from the total number of useable fireplaces in a given metropolitan statistical area for which the U.S. Census Bureau has compiled data through its various surveys.

The total number of useable fireplaces is a reflection of (1) total population, (2) the fraction of single-family homes versus multi-unit buildings, and (3) again the “fireplace culture” of a given area. It should be noted that for some areas, such as the combined New York City and Northern New Jersey MSAs, even though the fraction of housing units with useable fireplaces is much smaller than many other areas, it still ranks in the top five potential marketplaces because of its large population.

Finally, it needs to be noted that the estimate of market size for both fireplaces sold for new construction and for retrofitted units includes appliances of all fuel types (gas, cordwood, pellets and electric). Gas appliances are only part of the market and the relative ranking of metropolitan areas for gas-fueled fireplaces, inserts and gas log sets may shift as compared to fireplaces in general when environmental regulations restricting the installation or limiting the use of cordwood fireplaces are taken into consideration.

For example, the installation of new cordwood fireplaces is restricted in all or part of the Southern California, Phoenix and Denver areas. Hence the majority of new fireplaces and retrofit units will be gas-fueled and the relative ranking of these areas for the gas fireplace market may be higher than for fireplaces in general.

Similarly, the inconvenience of periodic burn bans in Seattle, the California Bay Area, Southern California, Phoenix, and Denver areas may influence homeowners to purchase gas fireplaces rather than cordwood fireplaces, to change out their existing cordwood fireplaces to gas fireplaces, or to retrofit them with gas-fueled devices.

Who Are the Consumers?

Simply put, the typical gas fireplace owner is a “middle-of-the-road” middle class American. As previously noted, most gas fireplace users are owners of a single-family suburban home (82% of gas fireplace users own their residence). Further, the most common profile elements of a gas fireplace owner include: 52 percent Baby Boomers, 53 percent employed, 57 percent married, 81 percent Caucasian, 82 percent attended college, 48 percent are in residences that the home occupant considers as their “lifelong home,” and their average income is $75,697. If there were gas-fueled fireplaces in the ’50s, June and Ward Cleaver would have had one.

When Are Fireplaces Used?

According to HPBA’s 2012 survey of 500 gas fireplace owners, gas fireplaces are used on average 53 times per year. Not surprisingly, most of this usage is in the winter (34 times) with an additional 10 times in the fall, six times in the spring and three times in the summer. Twenty percent of gas fireplace users say that having a “focal point for holidays or family gatherings” best describes why they use a gas fireplace, 38 percent say it “produces heat/warms up a room temporarily” and 31 percent say they “experience atmosphere/enjoyment of a burning fire.” (Only 11 percent claim they are a major heat source.)

Fireplace usage has historically been linked to special occasions and getting together with friends. “The Quilting Frolic” was painted in 1813 by John Lewis Krimmel. Krimmel was known for his depiction of the pleasures of middle class life in America.

Those three primary uses are consistent with the average fire duration of 2.5 hours for gas fireplaces that would, for example, correspond to the duration of a dinner party or, in the evening period, after a workday for a middle class suburban family, particularly during a “cold snap.”

Further confirmation of the holiday and family gathering usage of fireplaces is the increase in local air pollution caused by the gas fireplace’s brethren – cordwood fireplaces. It has been observed by a number of air quality regulators that fine particulate levels in residential areas are often high during Christmas, Thanksgiving, New Years and Super Bowl Sunday from increased cordwood fireplace usage.

Simply put, during fall/winter holidays and in the evening during cold weather is when gas fireplaces can be expected to be most often used.

How Are Fireplaces Used?

Fireplaces are viewed as American as apple pie. Many politicians have associated themselves with the solid all-American fireplace image. FDR delivered his famous Fireside Chats, and Calvin Coolidge stated, “Look to the hearthstone; therein all hope of America lies.”

Common terms that have been used to describe the motivation for fireplace usage have included aesthetics, atmosphere, enjoyment and pleasure. Heat is also important. Certainly no one uses fireplaces to cool their home. Heat, particularly radiant heat, is part of the pleasurable experience. Even when the stated purpose for fireplace use is heat, aesthetics is generally part of the picture; a fireplace is generally not just viewed as a utilitarian heat source.

Consistent with fireplaces being zone heaters, in contrast to centralized furnaces, when used for heat their usage is most generally for secondary home heating rather than the main home heating source. (Fifty-four percent are located in living rooms and 39 percent are located in family rooms.)

Their secondary heating role is separated into two categories: supplemental and parallel. Supplemental heating equipment is defined as, “Additional heating equipment for a heated area of a housing unit.” Parallel heating equipment is defined as, “Heating equipment for an area not heated by the main heating equipment.” The ratio of reported fireplace secondary heating use is about 9:1 supplemental to parallel.

Also consistent with the fact that fireplaces are generally not main sources of heat and are not essential to most homes is that a large fraction of fireplaces are not used. A rough estimate based on the various surveys that have been conducted is that about one-third of fireplaces are not used in a given year. Fewer gas fireplaces are in the “not used” category (about 20%) than cordwood fireplaces apparently because they are more convenient to use.

What Do the Consumers Want?

Twenty-eight percent of gas fireplace owners state, “I love having one and cannot imagine not having one in a future home” and an additional 28 percent state, “I like having one and definitely want one in a future home.” Forty-nine percent of recent or prospective homebuyers rate a gas fireplace as either “essential/must have” or “desirable.”

Twenty-eight percent of fireplaces are used primarily for heat, 40 percent for aesthetics, and 32 percent are not used in a given year. The division between secondary heat and aesthetics is “gray” as the production of heat is an integral part of using a fireplace for aesthetics and vice versa.
The 48,445,200 estimate of total fireplaces in the U.S. in 2011 is the product of the total number of occupied housing units with one or more fireplaces times the factor of 1.2 to account for multiple fireplace ownership in some homes. It should be remembered that the data illustrated is for fireplaces of all kinds not solely gas fireplaces.

Importance of Selected Traits

Appearance is the most important trait for a fireplace. The National Association of Home Builders’ survey of 3,682 recent and prospective home buyers tallied the importance of selected traits home buyers may focus on for 13 individual home components.
The ranking of these traits for fireplaces were: appearance (46%), upgrade price (7%), brand name (2%), quality (31%), warranty (3%), and features (10%). Appearance and quality are shown in the above chart for the 13 distinct components.
Interestingly, not only was “appearance” the highest ranked trait for fireplaces among all the traits, but appearance for fireplaces was also the highest among the appearance category for all 13 components.

Many homeowners want more than one fireplace in their home. Due to multiple ownership, the average number of fireplaces in homes nationally is 1.2 and for new single-family houses completed in 2013, out of the total of 290,000 with fireplaces, 34,000 had two or more fireplaces.

Gas fireplace consumers particularly are swayed by appearance. Fifty percent of gas fireplace owners say that “architectural/design element” best describes the gas fireplace in their home. Forty-nine percent of gas fireplace owners stated that their primary motivation for the installation of their gas fireplace was “to make (the) room more attractive/inviting.” Forty-nine percent also stated that the “aesthetic/look of (the) product” was a major factor considered before a gas fireplace was installed in the home.

The National Association of Home Builders lists a gas fireplace as a “decorative feature.” Further, the association’s survey of 3,682 recent and prospective homebuyers found that “appearance” was ranked highest among all traits of fireplaces that homebuyers focus on most.

Certainly, other factors such as price/value, heating efficiency, quality, manufacturer’s reputation, and convenience are important to gas fireplace consumers. However, with the possible exception of price, which is a key factor in any purchase, appearance is clearly paramount.


Part three of this three-part series on gas-fueled appliances in the residential hearths of North America will focus on the history, market size and character of the various categories of gas hearth appliances as well as the insights provided by their manufacturers.

About the author

Dr. James E. Houck is a staff writer for Hearth & Home magazine, an adjunct faculty at the University of Portland, and an independent technical consultant specializing in product development, litigation support, environmental impact, energy conservation and strategic marketing. He can be reached via email.

 

Read Heart of the Hearth – Part I

 

Read Heart of the Hearth – Part III

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