Poll Results: Are Changes Coming to Remodeling Financing?

The remodeling sector overall is relatively strong, but the industry is facing challenges, namely rising costs and customer hesitancy due to economic uncertainty. Pro Remodeler wondered if these issues—and any others—could reshape the way projects are financed.

We launched a poll in November to find out, and nearly 200 of you weighed in…and let us know you’re just as unsure about the future of financing as we are.

Scroll down for results.

Uncertainty dominates. More than three-quarters of respondents (78%) are unsure about if there will be changes to the way homeowners finance their projects. Only 7% clearly said no changes are expected while a small 16% leaned toward some degree of change.

This one is almost unanimous: 96% say upcoming financing changes will be driven by external forces. Only 4% expect changes to come from within—suggesting most companies feel they’re reacting to the market, not proactively reshaping their financing approach.

Not surprisingly, most projects are financed. More than three-quarters say that 76–100% of their projects are financed, dwarfing every other category. With very few projects existing in the middle ground, it appears that homeowners need to finance their projects rather than pay for them out of savings or home equity.

The majority of respondents have annual revenues over $10 million.

Remodelers and home improvement pros were asked what an ideal financial model looked like to them, and we received a variety of answers, including:

• Homeowners relying less on financing and more on cash.
• Several respondents are pro staged or staggered funding; however, a few felt the opposite with one noting: “Stage funding should not be a thing. If businesses can’t buy their own supplies, they are not running their businesses well or should require deposits. Lenders should not subsidize businesses.”
• Long-Term financing options with decent interest rates, low monthly payment, no prepayment penalty for the client, and low to zero dealer fee for the contractor.
• Clients securing a loan with the payments going straight to the remodelers.
• Less reliance on in-house financing. One respondents said, “We have found that local banks provide better rates than a lot of ‘in house’ financing options, so we provide our clients with referrals. That way we can focus on what we are good at—renovation—and they can get better rates than what most of these ‘in house’ options provide. Plus, many of them charge fees to contractors, so it’s often a bad deal for the client and a bad deal for us.”