The responses have been tallied and the news is good, according to a new survey from ServiceMagic. During the Kitchen & Bath Industry Show (KBIS) in Atlanta on May 1, ServiceMagic CEO Craig Smith predicted that “we’ve experienced the bottom and are accelerating back up,” with regard to contraction experienced in the home improvement industry.
“It may seem like the industry is in peril, but consumer sentiment is still good,” Smith added, referring to a recently completed survey of ServiceMagic clients and service providers. “Both homeowners and service providers are confident about where the industry is headed.”
The Remodel & Repair Survey results include respondents’ feedback on how they view the state of the home improvement industry, and also compare service requests by industry for the first quarter of 2009 with the same period from 2008. Smith says that ServiceMagic was able to track regional and demographic data as well. “We’re seeing more affluent and younger demographics making home improvement requests -- the groups that are more inclined to go to the Internet first,” he says.
Small Projects, Big Focus
Overall, ServiceMagic reports seeing a trend toward homeowners viewing their homes as “lifestyle-enhancers” and long-term investments more so than they did when they first purchased their homes. “They want to increase the live-in value of their homes for their own enjoyment,” the report says, “not just because they want to increase their property value.”
Although large remodel projects were down year-over-year according to the report, small projects, such as countertop installations, are on the rise, currently up 39%. Other small jobs showing increases were glass and mirrors (35%) and awnings (76%). Additionally, audio-visual and computer installations (such as for media rooms or flat-screen TVs), rose 50%. In terms of expenditures, the majority of homeowners (68%) said that they anticipate spending up to $3,000 for remodel projects during the next six to 12 months.
As interest in small projects climbed, large projects dropped off from 2008 to 2009. Requests for kitchen remodels, basement remodel, and additions were each down 19%, while bathroom remodels dropped 10%. Requests for architects and engineers were down by nearly a third (29%).
Staying Put and Greening Up
Good news in the report is that requests for moving services also dropped dramatically (-38%), suggesting that homeowners are staying in their homes rather than moving to new ones. And though large projects have been down, homeowners hint that they intend to pick up where they left off, moving forward with projects that have been put on the backburner.
A third (35%) of homeowners surveyed noted that they postponed a remodeling project in 2008. However, 64% of those homeowners plan to move forward with that project this year. Nearly half (46%) of respondents said that they are more likely to consider a remodeling project in 2010 than in 2009.
Many homeowners have energy efficiency on their minds, which is further indicated by the ServiceMagic data. Home inspection requests doubled from the first quarter of 2008 to the first quarter of 2009, up 101%. Also listed among the top service requests are heating and furnace systems (28%), insulation (26%), air conditioning (15%), plumbing (15%), and mold and asbestos services (11%).
“The economic stimulus package will drive a lot of behavior going forward,” Smith said in response to a question from REMODELING during the KBIS press conference. “There’s a lot of uncertainty for homeowners about what it means to be green and where best to spend their money. We’re seeing increases in home energy audits as homeowners are getting a sense of how to best spend their money for efficiency upgrades. It will be interesting to see how the stimulus dollars play out and how that impacts home improvement decisions.”
Though the entire country has been affected by the economic downturn of 2008, some areas of the U.S. were hit harder than others. By the same token, some cities thrived despite the housing crisis. ServiceMagic’s survey spotlighted several cities in eight geographic regions.
“Some regions, like the great plains, showed less volatility in housing prices, so the amount of home equity available there didn’t vary as much as in the South and Pacific regions,” Smith said. “Then you have cities like Detroit and Las Vegas where demand is driven by foreclosures, so the trends are very different.”
A note on methodology: Because ServiceMagic experienced 13% overall growth in service requests in the first quarter of 2009 compared with the same time period of 2008, all regional- and category-specific data were adjusted down to account for the change. Example: If a city’s service requests were up 13% for the year, ServiceMagic would report the change as zero (0) or “even.”
Great Plains (IA, KS, MO, ND, NE, SD): Overall service request activity rose 18% in this region, and homeowners focused on discretionary items, such as hot tubs/spas/saunas, and deck installation, ServiceMagic reports. This region had the highest number of categories that saw increases of more than 20%. Top cities in this region showing service request increases were Davenport/Rock Island, Iowa (+58%); Topeka, Kan. (+22%); and Lincoln, Neb., and Des Moines, Iowa (+17% each).
Deep South (AL, AR, FL, GA, LA, MS): Up 8% in overall service request increases, the Deep South saw its biggest increase in audio-visual service requests (+59%), as homeowners invested heavily in home theaters, according to the report. The area also shows heavier increases in requests for air conditioning installation and repair, as well as for fireplaces and wood stoves. Top cities showing service request increases were Fort Myers/Cape Coral, Fla., (+50%) and Lafayette, La., (+25%). Gainesville, Fla., showed the biggest decrease in service requests in this region (-10%)
Midwest (IL, IN, MI, MN, OH, WI): Service requests rose 7% overall in the Midwest, as homeowners focused on outdoor spaces. Requests for tree care, paving, sheds, lawn care, and roofing all rose in this region. Inside the home, countertop-related requests were up 43%, while kitchen remodels overall dropped 25%. Springfield, Ill., (+52%) and Lafayett, Ind., (+50%) showed the biggest increases in service requests, while requests in Detroit rose 11% after the city became one of the nation’s first to be hit hard by the downturn. Requests were down by 11% in the Minneapolis/St. Paul area.
Southwest: (AZ, NM, OK, TX): Not as heavily affected by the general remodeling categories as other regions, the Southwest saw its large declines in the moving category (-41%) and in the designers/decorators category (-26%). Home inspections in this region were up 76%. Looking at service requests by city, it was a good time to be a service provider in Beaumont/Port Aurthur, Texas, where requests nearly doubled (+96%). Requests rose by 38% in Waco, Texas, while Phoeniz/Mesa, Ariz., saw requests drop by more than a quarter (-28%).
Upper South (DE, KY, MD, NC, TN, WV, VA): Requests in this region dropped by 1% according to ServiceMagic’s records. Residents in these states seem to be staying put, as requests in the moving, home building, and architects categories dropped 38%, 31%, and 30%, respectively. Meanwhile, requests for home inspections rose by 139%. City by city, service requests increased the most in Charleston, W.V. (+50%); Lexington, Ky. (+32%); and Jacksonville, N.C. (+24%). The biggest decreases were seen in Baltimore (-16%) and Richmond/Petersburg, Va., (-10%).
Northeast (CT, MA, ME, NH, NJ, NY, PA, RI, VT): Heavily affected by seasonality, the Northeast saw a huge increase in weather-related requests, including heating (+23%) and snow removal (+80%). Home inspection requests rose the most in this region, up by 148%. Cities in New York generated the biggest service request increases, with requests up by 42% in Buffalo/Niagara Falls, 28% in Rochester, and 17% in Albany/Schenectady. Decreases were seen in Jersey City, N.J., (-22%), and in New Haven/Miridian, Conn., (-17%).
Mountain (CO, ID, MT, NV, WY, UT): Overall, this region showed a 9% decrease in service requests, with requests in Las Vegas down by 13% (unadjusted), thanks to a high foreclosure rate there. General remodeling categories were on the decline in this region, while homeowners focused more on surface treatments, such as countertop, garage door, and carpet/upholstery replacement. Salt Lake City and Denver both saw service requests drop by 19% and 18%, respectively.
Pacific (AK, HI, NV, OR, WA): Accounting for the 13-point adjustment of regional data, the Pacific region was the only one to show a decline in real ServiceMagic homeowner service requests, the company reports. Requests were down 1% overall (-14% adjusted). However, small projects continued to show promise here, as countertops and audio-visual projects increased by 38% and 37%, respectively. Home inspections rose 66%. Top cities showing service request increases included Anchorage, Alaska, (+34%); Modesto, Calif., (+29%); and Honolulu (17%). The biggest drops were seen in Seattle/Bellvue/Everett, Wash., (-32%); Portland, Ore./Vancouver, Wash., and San Francisco (-30% each); and Sacramento, Calif., (-21%).
Service Provider Sentiment
Overall, survey results show that homeowners are feeling more optimistic now than they did during the last quarter of 2008. More than half (55%) of respondents said that they feel better about their homes being a secure investment now versus three months ago. A third (33%) are more likely to put money into value-increasing home improvements now compared with Q4 2008.
Service providers are also keeping their chins up. Though 82% of respondents said that they saw a drop in total revenue during the last 12 months, 72% say they are optimistic about their company’s performance in 2009. Nearly two-thirds (60%) say the number of customers they’re able to bring in will be the first aspect of their business recovery, while 23% expect the size and scope of projects to rebound first.
Opinion is split on when business will stabilize, however. A third (31%) of service providers expect an evening-out within two to four months, while 24% say it could take five to eight months. One-fifth (21%) say that the recovery will take up to a year, and another 25% don’t anticipate stabilization for more than 12 months.
The full report of the survey results can be viewed here. ServiceMagic plans to update the report several times a year.
(Hanley Wood, the company that publishes Remodeling, has a business relationship with ServiceMagic.)