Let’s start the year off with some good news. If the remodeling industry continues at the pace recorded at the end of last year, remodelers will experience a fourth consecutive year of increased spending in 2014.
In 2011, remodeling spending was $276 billion for home and rental property improvement and repair; 2012 saw that number increase to $284 billion, and 2013 was projected to hit $317 billion, according to the Remodeling Futures Program at Harvard University’s Joint Center for Housing Studies (JCHS).
Tempering the enthusiasm slightly, JCHS is predicting remodeling spending to flatten in the middle of 2014 based on a slowdown in home building in late 2013 that is concurrent with a rise in financing costs. Despite the predicted tapering, the remodeling industry is expected to remain at healthy levels for the entirety of 2014, according to JCHS.
Meanwhile, the National Association of the Remodeling Industry’s (NARI) Remodeling Business Pulse (RBP) data of current and future remodeling business conditions reported quarter-over-quarter increases in almost all of the subcomponents measuring remodeling activity. In late 2013, when remodeling work typically tends to be on a downswing for the year, NARI reported its highest overall rating on business conditions at 6.41, up from the previous quarter’s 6.31 rating. The RBP has increased for the past six quarters, according to NARI.
In a final measuring point indicating market resurgence, all three major components of the National Association of Home Builders’ Remodeling Market Index (RMI), which measures current market conditions, increased in late 2013. Major additions and alterations increased from 51 to 55, minor additions and repairs from 55 to 58, and maintenance and repair from 57 to 59. The future market indicators component of the RMI remained even with the previous quarter reading of 56.
Most remodelers we’ve spoken to in the latter part of 2013 indicated they increased their margins in 2013 and expect to do so again in 2014. In a feature story entitled “2014 Market Forecast: Carrying the Momentum” (see December 2013 issue of Professional Remodeler), 71 percent of remodelers expect their revenue to increase in 2014; 19 percent expect no change to their revenue in 2014; and only 10 percent expect their revenue to decrease compared with 2013. Aggregated, ninety percent of remodelers expect their revenue to stay the same or increase in 2014 compared with 2013, a year in which $317 billion was spent on home and rental improvement. Those are some staggering numbers, and if the industry continues at this economic pace in 2014 even with the projected flattening in the middle of the year, the $317 billion mark notched in 2013 will be eclipsed.
Do you think the industry has the momentum to continue at this pace? Is your staffing at the proper level and will your business have the bandwidth to take on the additional workload? Do you want the increased workload?
To find out exactly how the industry is preparing for what could be a monumental year in terms of spending, visit my Industry Insider blog on our website, ProRemodeler.com. There you will find discussion in regard to the questions I listed above as well as predictions from your peers about what they expect in 2014. PR