Qualified Remodeler Magazine

OCT 2018

Qualified Remodeler helps independent remodeling firms to survive, become more professional and more profitable by providing must-have business information, namely best business practices, new product information and timely design ideas.

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could be as much as 10 percent bigger if skilled labor was readily available to meet current demand. JBREC and others expect labor shortages to continue in 2019. According to JBR EC, labor availabili- ty a ects revenue, and we have estimated that labor shortages will keep professional remodeling growth 2 to 3 percent lower than would have occurred without labor constraints. €e exact impact will be very hard to quantify. Existing-home sales As previously discussed, existing-home sales are well below peak. NAR's Yun is predicting 4 percent growth over the next two years. JBREC expects 5.4 million existing-home sales in 2018 and 5.2 million in 2019. €e relationship of resales to remodeling activity is well documented. According to JBREC's Tomalak, "More sales drives more big project remodeling, but it also lowers the amount spent per big project remodel due to the value-focused mix of projects undertak- en on recent-mover homes. Each 100,000 increase in annual resale sales drives a 0.1 percent increase in big project remodels, Funds from home-equity loans are frequently reinvested into home remodeling projects. Kitchens and baths are the top projects where those funds are invested. ŅƚųÏåŸ×%±ĺĩƚųƴåƼ×ƗljŏƁB)XkFĺÚåƻŠ%±Ƌ±×%åÏěŏƁØƚŞÚ±ƋåÚ±ĺĺƚ±ĬĬƼš The U.S. cabinet industry would be "directly impacted" as a result of pro- posed new tariffs to be imposed on a wide range of wood-related imports from China, says the Kitchen Cabinet Manufacturers Association (KCMA). The Reston, Virginia-based KCMA issued its comment in response to the release by U.S. trade officials of a lengthy list of Chinese goods that would be subject to a potential new tariff resulting from the escalating trade war between the U.S. and China. The products include kitchen cabinets, modular vanities, cabinet components, MDF, fiberboard, veneered panels and laminated wood, all of which would potentially be subject to a pro- posed 10 percent duty imposed in retaliation to tariffs that China recently imposed on U.S. goods. It was not immediately clear when the tariffs will go into effect or what specific impact the duties would have on the U.S. cabinet trade. However, KCMA says its attorneys suspect that the Chinese imports targeted for the tariff represent "a significant volume/value of imports" and would "directly impact the cabinet industry." The U.S. has charged that China, for many years, has pursued abusive trad- ing practices that have resulted in the transfer and theft of intellectual prop- erty and technology to the detriment of the U.S. China has denied the practice. Earlier this year, the U.S. imposed a 20 percent duty on softwood lumber from Canada. Since then, lumber prices have risen dramatically, forcing remod- elers to pass those costs on to their customers. Trade skirmishes, tariffs add to cabinet and lumber price uncertainty The prices for framing lumber and structural panels have spiked as a result of rising demand and a tariff. Sources: Random Lengths: John Burns Real Estate Consulting, LLC Š%±Ƌ±×IƚĬƼěŏîØ{ƚÆ×eƚčţěŏîš which represents about 10,000 incremental big project remodels at current levels. Each 10 basis-point increase in the rate of turn- over of the housing stock causes -0.5 percent lower spending per big project remodel and -1.3 percent lower spending per small project remodel." Building materials prices Demand for building products is rising, which pushes prices higher in many categories— from gypsum board to appliances. In some categories, namely framing lumber, prices are higher due to newly imposed 20 percent tar- i s on Canadian lumber. Since last year the HOME RENOVATION PRIORITY—USE OF HELOC MONEY FRAMING LUMBER AND STRUCTURAL PANEL PRICES kXXFc:ŏƗěakcBe)e:) Random Lengths Framing Lumber Composite Price = 25% Random Lengths Structural Panel Composite Price = 28% Housing Starts, Rolling 12-Month NSA (right axis) = 4% Kitchen Bathroom Add a room Other Backyard Basement Living room 35% 22% 9% 8% 7% 6% 5% $510 $480 $450 $420 $390 $360 $330 $300 $270 $240 $210 2,200K 2,050K 1,900K 1,750K 1,600K 1,450K 1,300K 1,150K 1,000K 850K 700K 550K 400K 2010 2011 2012 2013 2014 2015 2016 2017 2018 EXCLUSIVE REPORT: Remodeling Market Outlook 26 October 2018 QR QualifiedRemodeler.com

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