The Larger Challenge

After nearly three years of conversation, Harvard’s Joint Center for Housing Studies and the NAHB have convinced the Census Bureau that the remodeling market is indeed undervalued.

September 07, 2000

 

Rod Sutton

After nearly three years of conversation, Harvard’s Joint Center for Housing Studies and the NAHB have convinced the Census Bureau that the remodeling market is indeed undervalued. In August, Census released new figures on the size of this market. Remodeling expenditures were $143 billion in 1999, 20% higher than the NAHB’s estimate using the old data. Census added 11% to 1998 spending.

"This is definitely good news," says NAHB president Robert Mitchell, "but I think the Census Bureau is telling us something that most remodelers already knew. Many of our member remodeling companies are barely keeping up with the rush of homeowners [looking to remodel.]"

Remodelers with showrooms are wrestling with this rush right now. Those with showrooms in high-traffic locations face increased walk-in traffic. In addition to clients who are drawn to the company, window-shoppers come in looking for ideas and architects bring in their clients to scout for styles. These latter customers have little or no intention of hiring the remodeler.

One remodeler told us he had to post signs prohibiting cameras because people were stealing ideas from displays he had spent thousands of dollars constructing. He cut his "public" hours in half because he wants his showroom staff selling, designing and estimating instead of shepherding shoppers. Another remodeler closed his showroom to the public, opening it "by appointment only."

These struggles are part of the larger challenge facing professionals: Demand is high for remodeling services, yet the supply of truly professional remodelers is outweighed by the supply of those who aren’t. The challenge is to target, qualify and satisfy the customers who best match the company’s strategic goals for sustainable business success.

More manufacturers will target and satisfy those remodelers who offer the best opportunity for sustainable sales growth, too. Kermit Baker, director of the Remodeling Futures Program at the Joint Center, says the revised Census numbers will bring more attention to the remodeling industry. "Manufacturers will pay more attention, knowing that the remodeling side of their business is bigger than they thought it was," Baker says. "Manufacturers don’t have a very good sense of how much of their business is remodeling."

Coming on the heels of the announcement that Census has given the industry its own North American Industry Classification System code (236118), the revision in spending will further solidify this industry as a legitimate market, driven by professionals who not only serve clients, but also value and seek out strong relationships with the suppliers and manufacturers that recognize the opportunities in the years ahead.

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