remodelers should heed as they look ahead
and make decisions about the future of their
businesses. e first is the constrained supply
of homes for sale. Second is the strong de-
mographics that will drive 12.5 million new
households into the market between 2016
and 2025.
A massive survey of 23,000 home buyers
earlier this year finds that more than half of
the respondents simply cannot find a home
they like or want to buy. For remodelers, this
means that existing-home sales — that engine
of remodeling growth — is likely to be low
for quite some time. e silver lining is that
homeowners are staying put and embarking on
bigger projects. It will drive room additions as
well as major exterior renovations like siding
and windows, says Burns' Todd Tomalak.
e demographic analysis comes from
a forthcoming book by John Burns on the
subject, where large generational groups are
studied in smaller, decade-long age cohorts.
e book draws a correlation between Great
Depression Era babies and those born in the
1980s, and assumes similar rates of household
formation between the two groups. For re-
modelers this means a good runway for home
improvement activity in the years ahead.
All of this macro level discussion leads me
to cite a pillar of microeconomic theory, the
eory of Rational Expectations. Businesses
make decisions about the future based on
current conditions, past experiences and ra-
tional expectations for future conditions. If
the forecast is any guide, remodeling should
be strong (with only slight interruptions) for
the next decade. It suggests you can rationally
expect a strong foundation on which to grow
your remodeling business.
|
t our office we use an online tool
called Google Analytics. It gives us
a readout on our websites. Among
other things, it tells us which ar-
ticles, videos and webinars are most popular
with you, our readers. I confess to looking at
these numbers quite often.
In general, remodelers gravitate toward arti-
cles that offer clear solutions to specific prob-
lems. A recent article we wrote about decking
fasteners scored surprisingly well. So too do
articles that help solve business related prob-
lems — think marketing, pricing, profit, etc.
is information guides our planning so we
can give you more of what you seek.
Here's another confession: I like eonomic
stories about the broader market more than
you do. I understand the sentiment. You are
too deep in the nuances of your local market
to really take an interest in the broader in-
dustry. at said, this month we present new
forecast numbers from John Burns Real Estate
Consulting.
LOOKING AHEAD
Economists concede that forecasting is fraught
with peril. ere are always unforeseen events
and responses to conditions that derail expect-
ed outcomes. e work of John Burns Real
Estate Consulting is remarkable for how far
into the future it is willing to peg the indus-
try. As was revealed last month, they expect
the industry to grow 26 percent by the end of
2019. eir forecast suggests that we've not
only come all the way back from the depths of
the housing collapse, but we are headed higher
in coming years.
is month's discussion of their forecast
includes two fascinating macro-level drivers
Rational
Expectations
A
6 October 2016 QR QualifiedRemodeler.com
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Patrick L. O'Toole