Late this summer, The Remodeling Futures Program, part of the Harvard Joint Center for Housing Studies, released revised figures showing that in 2007 total remodeling expenditures are projected to surpass $300 billion for the first time.
“So what?” you might ask. “Sure, that's a big number, but what does it have to do with me?”
Most remodeling is personal and local, so I empathize with those who find it difficult to see the value in this type of aggregated statistic. But I also know that every once in a while, it makes sense to take a step back and look at the big picture. And the remodeling picture is getting bigger all the time.
And that's the first answer to “So what?” The industry is growing fast. The $306 billion in expenditures projected for 2007 represents a 90% increase in 10 years (total expenditures in 1997 were $161 billion). True, it's a mix that includes rental units, and the rental market often jumps when housing turns downward. But most of the remodeling money is spent on owner-occupied properties. In the last three years, for example, while rental expenditures have grown $3 billion, owner-occupied expenditures are up by $23 billion — from $231 billion in 2005 to a projected $254 billion in 2007.
Rapid growth attracts attention, and product manufacturers are beginning to sit up and take notice. They have long been focused on new construction because it has always been a much bigger market, and builders are more visible and easier to identify. Topping the $300 billion mark puts the remodeling market on the map, so to speak. It means that manufacturers will increasingly cater more to the unique needs of your business. You and I know how remodeling differs from new construction, but most manufacturers don't and, until recently, they had little incentive to learn. Now they do.
SO WHAT? Still asking? How about the stability and permanence that this kind of size and growth imply? The remodeling market appears to have reached a tipping point and is well positioned for steady growth. Houses are more numerous and more complex than ever before, and homeowners' space requirements are increasingly diverse. That creates a demand for remodeling that homeowners are increasingly less likely to undertake themselves, which means their reliance on remodeling professionals will increase. Plus, no matter how well houses are built, systems wear out and need replacement, which creates more demand.
Here's one more reason why size matters: It makes remodeling an attractive business proposition. The more remodeling companies are seen to be profit centers, the more likely they are to become candidates for acquisition. And not just by other remodelers but by entrepreneurs with no prior remodeling industry experience. I still don't believe that industrywide consolidation will occur anytime soon, but I do believe that individual remodeling company owners will be more able in the future to sell their businesses instead of simply closing their doors.
Numbers don't tell the whole story, but they do provide an introduction. Who knows, a larger, more visible remodeling industry may start to attract good help. People want to work for an industry that is growing, that's visible, that means something. At $306 billion and counting, remodeling is all of those things.
And then some.
Sal Alfano, Editorial Director