Are We Entering a Decade of Growth for Remodelers

Rosemary Hayn

Rosemary Hayn

Every two years, The Joint Center for Housing Studies of Harvard University publishes a report supported by the companies and organizations who participate on two of their committees; the Policy Advisory Board and the Remodeling Futures Steering Committee.

The most recent report, A New Decade of Growth for Remodeling provides some insights that can help building professionals as they continue to struggle with a sluggish housing market.

If you follow the industry to great lengths, as I do, these reports provide a great deal of factual information from an historical perspective but only a small amount of forecast data.

For example, it is a given that older metropolitan areas have older stock that need energy efficiency upgrades while growth areas in the South and West have newer inventory. The number of remodeling opportunities, therefore, will be more abundant in older parts of the country.

When reading this report the questions one should ask are:  What’s new? What’s different? What do I need to know? 

Here are a few highlights:

  • Green projects will continue to provide important growth opportunities.  The results of the National Green Remodeling survey indicate that important projects where homeowners specified green features increased by 25% over all projects. Tax incentives due to energy efficiency, under the Federal Stimulus, helped support that increase.
  • The share of replacement product systems upgrades that support energy efficiency will continue to grow.
  • Energy efficiency upgrades for new and existing homes offers a huge potential for remodelers.
  • With the economic downturn, immigration has slowed but as the economy recovers, new immigrants will contribute greatly to the remodeling industry over the next decade.
  • Homeowners will continue to invest in small upgrades that provide a quicker payback or have incentives attached to them.  With the reduction in the 2011 Economic Stimulus to $500 the projects could remain very small in scope.

From 2000-2005 there was a  7.3 percent growth rate for homeowner improvement spending, followed by a five year trend showing a -1.4 percent in spending.  The report anticipates a 3.5 percent annual growth rate in home improvement spending which puts the 2010-2015 period in the middle of the two previous five year periods.

Also, in the next five years the number of households moving into 55 – 64 and 65+ age ranges will be preparing for retirement.  If they plan to age in place they will, most likely, need to make renovations to their home to improve the energy efficiency and lower the maintenance needs of the structure such as increased insulation or low maintenance exterior cladding. This will be another opportunity for remodelers.

From 2002 – 2007 there was a 23% increase in specialty contractors and self-employed remodelers but since then, remodelers have struggled due to declines in homeowner spending and the increased competition from builders-turned-remodelers. 

What we don’t know, because the data isn’t collected annually, is how many have survived the economic downturn. Clearly those who diversified their services or moved into niche markets, such as energy efficiency upgrades, most likely, have survived.

Rosemary Hayn is Manager, Market Research and Planning for CertainTeed Corporation

How the Customer of the Future Will Affect the Home Improvement Industry

Rosemary Hayn

Rosemary Hayn

I recently attended the Home Improvement Research Institute (HIRI) Conference in Chicago, Illinois.  HIRI is a membership based, independent, not-for-profit organization of manufacturers, retailers, wholesalers and allied organizations in the home improvement industry.  Its mission is to be recognized as the primary authority for effective, useful information about home improvement products and services in North America.

One of the sessions shared results of a study on consumer trends conducted with HIRI and The Futures Company a leading consumer research company.  The purpose of this study was to provide building professionals with consumer lifestyle wants and needs for the home.  The survey group included 26 – 41-year-olds. The results provide food for thought for manufacturers, retailers and building professionals in selling to the changing consumer:

There were five key trends that emerged from the survey:

  • More savvy, intelligent consumers, want products customized; want best deals; seek reviews and recommendations; focus on real, tangible benefits; want luxury at accessible prices. This is considered Consumers in Control.
  • Return to simple, less ostentatious living; products that withstand the test of time; making old classics with modern production standards; value transparency as mark of trust; interested in people behind the products. This illustrated The Genuine Article.
  • Focused on waste reduction; recognize challenge of a resource-constrained world; better solutions without compromise on performance or price; making positive contribution to community. This translated to Making a Difference.
  • Rediscovering life’s simple pleasures; desire intensified sensory experiences; solutions that save time and make life easier; maximizing performance of body, mind and spirit to attain goals. Referred to as Life, Well Lived.
  • Turning to trusted networks; coming together to share knowledge; connecting with local communities; value traditional forms of connection; mix of new influences on identity and tastes. Examples of Cultivating Connections.

Consumers clearly desire to have conveniences in the home to make living easy but are very focused on reducing waste and having more efficiency in their building envelope and appliances.

As I reviewed the statistics associated with the preferences, I discovered some interesting trends: 

  • Consumers say an important reason for them to do home improvement is to make their home better fit their lifestyle. (83%)
  • Say that price is more important than brand name. (76%)
  • Are doing more comparison shopping before buying – this includes those whose household income is $100,000+. (62%)
  • Wish they knew more about the home improvement products they purchased and how to maintain them. (73%)
  • Say their happiness doesn’t depend on how many possessions they have. (78%) 
  • Have learned, through the recession, to improve their home without spending a lot of money. (65%) 
  • Agree that you can depend on brands that have been around for a while. (87%) 
  • Feel it is important to know what is in a product in order to make a buying decision. (69%)
  • 52% have installed energy efficient appliances and 16% plan to.

This is just scratching the surface of the information in this study.  This information is very valuable in determining what products as well as product features and benefits the consumer of the future will expect and prefer. 

Are you starting to see these trends among clients or potential clients?

Rosemary Hayn is Manager, Market Research and Planning for CertainTeed Corporation