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Brighter Days Ahead for Remodeling?

Tuesday, August 14, 2012

More items for Maintenance + Renovation

The skies may be clearing for U.S. remodeling contractors.

A nationwide survey of remodeling contractors suggests the current business climate is “slightly more positive” than the same time a year earlier.

Rob Thomas / Wikimedia Commons

While inquiries, bids, conversion of bids to jobs, and sales value of jobs increased since last year, each category was down from NARI’s March survey figures.

Why? Some feel the recession storm has passed and anticipate consumer confidence returning more consistently moving forward, according to the second-quarter research study conducted by the National Association of the Remodeling Industry (NARI).

Outlook for Future

The outlook for next three months is positive, but slightly dimmer than that expressed in March. NARI said that statistically significant change could be due to seasonality.

NARI members who forecast stronger sales growth in the next three months base that opinion on three key factors: postponement of projects (80%), growth due to low interest rates (50%), and improving home prices (35%), NARI said.

NARI

Remodeling contractors still voice a conservative outlook on business conditions. Shown here is a before and after look at the National CotY award winning project in Residential Exterior Under $100,000 from Sicora Inc., based in St. Louis Park, MN.

NARI members who forecast weaker sales growth cited a highly uncertain future (95%), higher unemployment (47%), and difficulty in getting loans (43%) as the primary reasons.
 
Consumers: Singing a Different Tune

Yet, the remodelers surveyed say consumer confidence has a different tone “this time around,” NARI said.

“People are aware that that their home values may not be as high as they once were, yet that only affects those that are forced to sell,” said Kevin Anundson, NARI national secretary and president of Owner Assisted Remodeling based in Elm Grove, WI.

“Many homeowners have made the decision to remain in their home and are choosing to make improvements and increase their comfort and long-term living accommodations. This thought process allows them to be much less concerned about returns on investment and resale values.”

Contractors: Still Reserved
 
Still, NARI members voice a conservative outlook on business conditions and are working to maintain the tighter and more efficient systems implemented during the past several years, the association said.
 
“As with most business owners, remodelers are only increasing staff when it makes good financial sense,” Anundson said. “We are actively striving to keep overhead low, while continuing to invest in effective marketing strategies. Even as the remodeling market improves, we have gained a new insight into the fluid nature of our national economy.”

Study Findings

The survey ran from June 20 to July 1 and was completed by 436 NARI members.

Specific findings are highlighted below. Any number over five indicates a positive trend versus the previous year, NARI reports.

• Number of inquiries has increased since last year (5.72)

• Requests for bids has increased since last year (5.75)

• Conversion of bids to jobs has increased since last year (5.33)

• Sales value of jobs sold has increased since last year (5.46)

While inquiries, bids, conversion of bids to jobs, and sales value of jobs increased since last year, each category was down from NARI’s first-quarter survey in March.

By Region

NARI said that the South, at 5.35, and the West, at 5.44, appeared to lag behind the Northeast (5.83) and Midwest (5.81) in current business conditions.

The South appears to be weaker on all sub-measures for current conditions, including inquiries, requests for bids, conversion of bids to jobs, and sales of jobs sold.

Looking ahead, the survey found that the Midwest has the brightest future business rating at 5.81 followed by the South (5.70) and Northeast (5.68). The West has the weakest outlook, at 5.51.