Survey: Stimulus package not all it's cracked up to be

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While some remodelers are realizing benefits from the stimulus package, most say it has had no effect on their business, according to the latest Professional Remodeler research.

October 01, 2009
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What else can be done?

Methodology

The stimulus package and its energy-retrofit tax credits since their passage earlier this year have been the focus of attention in the remodeling industry. Remodelers, manufacturers and suppliers have been touting the consumer benefits of credits for replacing windows, improving insulation and installing alternative energy products.

But is it making a difference? For most remodelers, the answer appears to be no.

Small group reaps benefits

 

More than 80 percent of remodelers said the tax credits have had no effect on their company or decreased business.

In our latest Professional Remodeler research, 18 percent of remodelers said they have had increased business because of the energy-retrofit tax credits, and only 1 percent said it substantially increased business. Instead, 76 percent said it has had no effect on their business, and 6 percent said it had actually decreased their business.

The stimulus didn't fare much better in the eyes of remodelers. A majority expect it to affect the economy — they just can't agree what that impact will be. In fact, more remodelers (32 percent) think the stimulus will worsen economic conditions than improve them (28 percent). More than 40 percent of remodelers said they expect the package to have no impact on conditions.

In both cases, remodelers in the Northeast are seeing a bigger benefit. Thirty percent of remodelers there said the tax credits have increased their business, compared with less than 20 percent in the rest of the country. Almost 40 percent of remodelers in the Northeast also said they expect the stimulus to improve the economy compared with 23 to 26 percent in the Midwest, South and West. With the oldest housing stock in the country, remodelers in the Northeast may be best positioned to take advantage of credits for upgrades.

Only a third of remodelers are using the stimulus package as part of their marketing efforts.
A plurality of remodelers expect the stimulus to have no effect on the economy and only 28 percent expect it to improve economic conditions, compared with 32 percent who think it will worsen them.

 





Qualms with the stimulus package



We asked remodelers to identify the biggest flaw of the stimulus package, and 48 percent said too much government involvement, followed by 19 percent who said it didn't help their individual business, 11 percent who said it was too little stimulus and 9 percent who said consumers are unaware of the tax credits.

Another 11 percent selected "other." Some of their responses:



"Too much emphasis on energy."

  • "Unless there are ongoing monies available, it can only act as a short-term mechanism."
  • "Window criteria is ridiculous."
  • "Rebates/credits are too complex."
  • "Not long enough."
  • "A tax credit of $1,500 is too little and too late."
  • "Too much paperwork."
  • "My clients just do not want to spend any money or they do not have any money to spend."

Stimulus strengths

Half of all respondents said the stimulus package had no strengths. Not everyone has a negative outlook on the stimulus, though. The top strength of the package is that it is encouraging people to upgrade their product choices, said 21 percent of remodelers. Another 10 percent said it stimulates the economy, 6 percent said it drives business to remodelers and 5 percent said it builds consumer confidence.

The category that will see the biggest benefit from the tax credits is windows and doors, according to our survey, with 49 percent of remodelers noting it. That's not particularly surprising, as window replacement contractors and manufacturers have made the biggest push in marketing the stimulus tax credits. The next highest categories were insulation and HVAC, each selected by 14 percent of remodelers. Only 9 percent of remodelers said they think alternative energy, such as solar and geothermal, will be the most popular type of remodel despite the larger credits on those projects.

 

What else can be done?

We asked remodelers, "What else could be done to stimulate the remodeling industry?" Here are a few responses:

  • "Provide funds for the poor to repair or maintain their homes."
  • "Income tax cuts so everyone who is earning has more money to do things like remodeling."
  • "Do something similar to the Cash for Clunkers program for homeowners improving or replacing what they have."
  • "Tax break for the contractors."
  • "Money must come to the remodeling industry in the way of loans. Banks still are not loaning."
  • "Appraisals that are reasonable."
  • "Lower taxes and reduce government involvement in the private sector."
  • "I believe that we are already giving away our kids' future. I do not believe we should do anything else with government money."
  • "Free up lending to existing homeowners and new-home buyers."
  • "The banks need to start lending again."
  • "Sales tax relief on building products."
  • "Cause homeowners to feel more secure that they won't lose their job any day."
  • "I believe the market could be stimulated by more positive media coverage."
  • "Get the government out of our pockets."
  • "Tie tax credits to major recycling."
  • "Provide low-interest loans to people who are looking to renovate using green materials and contractors certified in green building."

Methodology

549 remodelers completed the Internet survey Aug. 3 to Aug. 11, 2009. Participants were chosen from a random sample of subscribers to Professional Remodeler magazine or its Remodelers' Update e-newsletter.


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