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Investment Continues in Kitchens and Baths

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Investment Continues in Kitchens and Baths

Remodeling projects continue to drive up profit margins.

By Tim Gregorski, Editor in Chief January 3, 2014
This article first appeared in the PR January 2014 issue of Pro Remodeler.

After leading the remodeling industry out of a crippling recession, kitchen and bath projects continue to be the main driver of a remodeler’s margin almost four years later.

Because homeowners are investing in kitchen and bath projects, 94 percent of remodelers indicated they generated at least some of their business from kitchen remodels in 2013, according to the recent Professional Remodeler Kitchen & Bath Trends Survey. Concurrently, 96 percent of remodelers generated some of their 2013 business from bath-related projects.  

Seventy-seven percent of remodelers generated at least half of their business from kitchen remodels in the past year. This is up from the 65 percent reported by remodelers in 2012. Additionally, 79 percent of remodelers generated at least half of their business from bathroom remodels in the past year, just a fraction down from the 80 percent that was recorded for this category last year.

Work continues to increase

Just as in 2012, more than half of the remodelers who responded to the Professional Remodeler 2013 Kitchen & Bath Trends Survey reported their kitchen remodeling work increased in 2013, with 57 percent experiencing an increase. In 2013, only 13 percent said their kitchen remodeling business had decreased, down from 16 percent reported in 2012.

Last year, 52 percent of remodelers reported their kitchen work had increased or held steady.

The allure of open space in kitchens, the adaptation of islands, and new appliances continue to influence the homeowner’s decision to remodel.

“More people want new islands in their kitchens,” said an East Coast remodeler.

“Homeowners want a completely open and integrated kitchen and family room space with upgraded, professional appliances,” said a Midwest remodeler.

When asked about their bathroom-related work, more than half of the survey respondents indicated their bathroom remodeling increased in 2013. Fifty-eight percent (up from the 53 percent recorded in 2012) of respondents indicated their bathroom work increased last year, while only 9 percent said their bathroom-related work decreased in 2013.

The uptick of homeowners remodeling their bathrooms builds on the fact that homeowners are reinvesting in their own homes specifically to update the appearance of the bathroom.  

“Many homeowners are updating the appearance of their bathrooms with more affordable, higher end faucets and fixtures,” says one East Coast remodeler.

Breakdown of job types

In our 2013 Kitchen & Bath Trends Survey, 24 percent of remodelers reported they are specifically remodeling only the kitchen. Twenty-seven percent indicated they are remodeling the kitchen as part of a larger interior remodel that does not include an addition. Twenty-five percent said they are remodeling the kitchen as part of a whole-house remodel or addition. Finally, 24 percent said they are remodeling both the kitchen and bathroom.

Breaking down the specific types of job associated with a bathroom remodel, 26 percent of remodelers said the bathroom work was part of larger interior remodel that does not include an addition. It was a even split at 22 percent for bathroom-related work that was part of a whole-house remodel and addition, and remodelers who indicated the work was part of a kitchen and bath package remodel.

Slightly more than 30 percent of respondents indicated the bathroom work was the only job contracted for the project.

High-end kitchens compound growth

After taking a slight dip in 2012, the average price range for a kitchen remodel increased in 2013, especially for the highest price range. Fifty-seven percent of remodelers indicated their average price for a kitchen remodel ranged between $10,000 and $50,000, down slightly from the 60 percent recorded in 2012 for this range.

In the mid-range, 22 percent reported an average job price between $10,000 and $25,000 and 34 percent reported the price of their kitchen remodels ranged between $25,000 and $50,000. Continuing to build on momentum gained in recent years, 34 percent of remodelers said their average kitchen project was more than $50,000 in 2013. The higher-end kitchen remodel reflected 30 percent of the kitchen business recorded by remodelers in 2012, following 28 percent reported in 2011 and 22 percent in 2010.

Seventy-seven percent of remodelers reported their average kitchen price went up in 2013, while 7 percent said the average price went down. Last year, 75 percent of remodelers said their kitchen price went up while 9 percent said the price went down.

“People have been more willing this year to select higher-end products than the previous three-to-four years,” said one Midwest remodeler.

In regard to 2013 bathroom prices, 50 percent of remodelers indicated the average price of a bathroom remodel was between $10,000 and $30,000. Twenty percent reported a price range from $10,000 to $15,000 and 30 percent indicated a price range from $15,000 to $30,000. At the highest end, 13 percent indicated a price range of greater than $30,000. Thirty-seven percent indicated an average price of a bathroom project of less than $10,000.

Sixty-nine percent of remodelers said their average bathroom project price went up in 2013, while 7 percent reported their average price went down.

“This past year, I had more clients selecting higher-end finishes, materials, and fixtures for their bathroom products,” said an East Coast remodeler.

Reasons for K&B remodeling

The No. 1 reason homeowners are choosing to renovate their kitchens: They are preparing their home for sale. This answer, which was also the leading answer in 2012, was followed by creating more space, replacing old appliances and/or finishes, updating appearance, and improving the usability of the kitchen.

New cabinets and countertops remain the top features homeowners choose to update their kitchen followed by flooring, appliances, and sinks/faucets.

In regard to bathrooms, the No. 1 reason homeowners are electing to renovate their bathrooms is to update the appearance. This answer is followed by replacing old fixtures/finishes, creating a more luxurious bathroom, improving usability of the space, and creating more space.

Again this year, cabinets and countertops lead the way for specific bathroom features that are updated followed by bath/shower surfaces, fixtures, and sinks and faucets. PR

Remodeling projects continue to drive up profit margins.

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