Remodelers Report Weakening Market Conditions
Moving in tandem with a general slowdown in the home building industry, the nation’s remodelers reported some deterioration in market conditions during this year’s second quarter and were less optimistic about the near-term outlook for their businesses, according to the latest NAHB Remodeling Market Index (RMI), which was compiled earlier this month.
The RMI measures remodelers’ perceptions of both current market conditions and future expectations. The former moved down from 48.1 to 45.6 and the latter dropped from 48.9 to 43.5. Any number over 50 indicates that the majority of those surveyed see the market growing.
The RMI for owner-occupied units moved from 53.8 to 49.0 in the second quarter, while renter-occupied units increased from 36.7 to 39.0. Expectations for owner-occupied units and rentals declined from 53.2 to 47.2 and 30.4 to 28.8, respectively. Remodeling of rental properties accounts for a full third of total remodeling expenditures.
“We expected lower sentiment as the overall housing market slows, and the second quarter numbers certainly reflect that,” said NAHB Remodelors™ Council Chairman Vince Butler, CGR, CAPS, GMB. “However, the remodeling market should perform relatively well as the overall housing market slows.”
“Remodeling is less volatile than new home construction partly because nearly half of all expenditures represent non-discretionary maintenance and repair projects,” said NAHB Chief Economist Dave Seiders. “The average age of the housing stock is 32 years and rising — well past the time when major home systems need replacement. Supported by more than $11 trillion in home-owner equity, the fundamentals of the remodeling market will remain strong for the foreseeable future.”
A special question attached to the latest survey asked about trends in home modifications related to aging-in-place. Of the remodeling companies that were surveyed, 60% reported that they are performing these jobs, and of those, 76% said they had clients who were 55 to 64 years old, 67% had clients 65 and older and 43% had 45- to 54-year-old clients. Additionally, 75% said that requests for aging-in-place features were on the upswing.
Among the reasons why customers are requesting aging-in-place modifications:
- Planning ahead for future needs, according to 75% of the remodelers polled
- Living with older parents, 53%
- Acute age-related disabilities, 46%
- Acute non-age related disabilities, 23%
The majority of aging-in-place work was specified by the client (66%) instead of the contractor (34%). Only 4% of remodelers found potential clients unreceptive to suggested aging-in-place modifications.
For more information, e-mail Jim Lapides at NAHB, or call him at 800-368-5242 x8451.
How Does Your Remodeling Business Measure Up?
The “Remodelers’ Cost of Doing Business Study,” available through BuilderBooks.com, is a comprehensive assessment of the growth and viability of the remodeling industry that enables remodelers to see how their businesses stack up against the competition.
Conducted by the NAHB Economics Group and the Remodelors™ Council, the study provides a statistically accurate analysis of the remodeling industry in terms of size, profitability, time in the business, business organization and staffing.
The study allows remodelers to compare key business statistics, such as gross and net profit margins, against results from the most successful remodelers.
To order the “Remodelers’ Cost of Doing Business Study” online, click here, or call 800-223-2665.