The remodeling industry has a growing problem on its hands that must be addressed immediately.
Survey: Stimulus package not all it's cracked up to be
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.
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.
|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."
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.
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