At last October’s Remodeling Futures Program meeting at Harvard, Bill Apgar, senior scholar at the Joint Center for Housing Studies, opened his presentation on the cratering subprime mortgage market by noting the wisdom of not forecasting that the U.S. economy was getting better until it stopped getting worse. Good advice, especially considering that the problems in the mortgage and financial markets have deepened in the intervening months, and the prognosis for 2009 is that it’s going to get worse before it gets better. As it happens, though, the remodeling business climate appears to be getting worse and better at the same time. Among the many contractors our editors spoke with in connection with this month’s cover story (“Beyond the Bubble,”), some are having their best year ever, while others are at a standstill. Whom are we to believe?
Everybody has a story that puts the lie to some statistical truth. For example, we all know people who refuse to wear a seat belt because they’ve heard about somebody who survived an accident after being thrown clear of their car when others died who were strapped into their seats. Scientists typically ignore this kind of “anecdotal evidence” because, while the stories may be true, they don’t warrant the sweeping conclusions people draw from them.
That said, anecdotal evidence has its place. Like an oral history or a folk remedy, it can reveal and reinforce the accumulated wisdom within a defined group who share a common experience. And it can fill the gaps when there isn’t enough objective data from which to draw solid conclusions.
Nothing Changes Too Much
Which is precisely how it functions within the remodeling industry. So I’m OK with the stories remodelers are telling about an economy that is uneven, that allows some companies to thrive while others in the same market struggle to survive. I’m also OK when I hear remodelers saying, as many are saying now, that not much of what used to work is working the way it used to, and that a new approach is needed.
I’m OK with all of it because no market or economy or business is ever completely one way or another. But turnabout is fair play. This means that remodelers who are thriving in a market that’s tanking might want to pay close attention to stories from other remodelers who felt the same way right up until the moment their entire backlog was cancelled and their businesses fell off a cliff.
I think it also means that the “new approach” everyone is calling for is really a return to the fundamental principles of good business practice. Companies less than 15 years old may think these principles are new, but remodelers who have weathered downturns before and who are weathering this one have always known what they are. They include things such as: a varied but balanced marketing program that is focused not only on print but also on live interaction; what many have called “warmer contacts” with past customers and more relationship building; more courting of secondary sources (architects, real estate agents, home inspectors); more versatility in product and service offerings (small projects, maintenance work, energy evaluation and retrofit); and the list goes on.
Bill Apgar also cautioned against believing anyone who claims to understand everything that is happening to the economy. More good advice. But a couple of things seem clear. Credit is tight and people are confused. Even homeowners with remodeling needs and money to spend would rather do nothing than make the wrong decision.
But that won’t last forever. Sooner or later the markets will open up a little and homeowners will regain their confidence in the value of their homes. And when they do, the flood gates will open.
Some would say that the trick is to stay in the game long enough to see it happen. I say the trick is learning to play the game well enough to help make it happen.