Better days ahead for remodelers
Friday, October 16, 2020
People have spent a lot of time in their homes in the past six months, which has given them plenty of occasions to notice repairs and improvements they’ve wanted to make. They also have had more time on their hands because they are going out a lot less.
The combination has produced a boom in the home improvement industry, especially in product sales. For remodelers and designers, however, it has been a mixed blessing. While demand for professional services has rebounded in recent months from the historic lows in early spring, it has been dampened by the large number of homeowners choosing to undertake home improvement projects themselves. That trend is expected to change in the months ahead as homeowners shift their attention from smaller, simpler repairs to more substantial renovations requiring more expertise.
Once stay-at-home restrictions were relaxed and stores were allowed to re-open, sales of home improvement products surged. Results of the latest Home Improvement Products Market Study from the Home Improvement Research Institute (HIRI) finds an estimated increase of 8.7% in spending on home improvement products this year, compared to 3.2% growth in 2019.
HIRI forecasts that consumers will account for an 11% increase in sales this year, while professional contractor purchases are estimated to increase 3.8%. That imbalance reflects two trends: homeowners doing more DIY projects and homeowners preferring to do their own purchasing of products, even when a pro is involved in a project.
According to the National Kitchen and Bath Association (NKBA) Market Outlook Report for the second quarter of 2020, the proportion of homeowners actively working on home improvement projects increased from 19% in the first quarter to 36% in the second quarter. However, fewer of those projects, including kitchen and bathroom remodels, involved the use of professionals.
More than half were done without consulting or hiring a pro, up from around a third in the first quarter. About one in five homeowners engaged the help of friends or family members to assist with a larger project, and more than a third chose to do the work themselves.
An analysis of consumer surveys and data from the Census Bureau conducted by the Remodeling Futures Program at the Harvard Joint Center for Housing Studies (JCHS) shows homeowners for the most part are planning or have undertaken more manageable DIY projects, such as lawn and garden improvements, painting, minor repairs, and refreshing the décor. In many cases, homeowners said they did the work because they had more spare time (84%) and were home more often (81%). In other cases, homeowners are reluctant to allow contractors into their homes because of the health crisis (21%), and/or they save money (34%). These simpler improvements concluded and as conditions improve, the surge in DIY activity is likely to subside, say industry experts.
Based on previous market cycles, the authors of the JCHS study believe “there are no indications of a longer-term reversal in preferences of owners toward undertaking projects themselves, particularly larger and more complicated home improvements.” A sentiment shared by NKBA CEO Bill Darcy, who, in the release of the market outlook report, stated, “as the economy continues to reopen and improve, we expect smaller DIY projects will lead to more significant renovations.”
That optimism is bolstered by the newly released Leading Indicator of Remodeling Activity (LIRA) forecast from JCHS. Revising its second-quarter forecast, which had expected negative growth in home improvement and repairs spending by the second quarter of 2021, analysts at the Remodeling Futures Program predict spending will reach annual growth of 4.1% this year and will continue to realize moderate gains through much of 2021, softening to 1.7% annual growth by the third quarter. The more positive outlook is largely due to the economy recovering faster than expected and the strong housing market activity in recent months.
While Chris Herbert, JCHS managing director, cautions, “it remains to be seen if the strong sales market this summer translates into larger improvements that would drive even stronger growth in the coming quarters,” there is still reason for optimism, observes associate project director Abbe Will, noting, “recent strengthening of home prices and sales activity — including second home purchases — could provide further boosts to remodeling and repair next year.”
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