Qualified Remodeler Magazine

MAR 2019

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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Page 8 of 70

THE REMODELING MARKET was red-hot in 2018 and will continue to grow in com- ing years, according to a new forecast from John Burns Real Estate Consulting (JBREC). According to the forecast, the remodeling market grew 10 percent to an estimated $378 billion last year. Fewer disaster repairs and a shiƁ in project mix to smaller job sizes, how- ever, will impact the rate of growth in 2019 as the market passes the $380 billion mark. The forecast was delivered at a spe- cial Qualified Remodeler research event held Feb. 20 in conjunction with Design & Construction Week in Las Vegas. According to JBREC CEO John Burns, the remodeling market is experiencing a shiƁ in demograph- ics. Baby boomers are driving large discre- tionary projects, while the nation's largest cohort—millennials—are starting to enter the market, but with smaller budgets. The JBREC presentation also pointed out that, of six indicators of remodeling industry vitality, four are positive: 1) Aging housing stock—65 percent of the nation's homes are 30 or more years old; 2) real income growth—signs all workers are seeing bigger paychecks; 3) home equity lending—more lenders are focused on offering HELOCs; and 4) home-price appreciation—solid, but expecting to slow. Two negative indicators are slower volumes of existing-home sales and a continuing labor shortage crisis. Another big factor in a positive re- modeling outlook, Burns says, is an envir- onment of rising mortgage interest rates, which is having the effect of incenting homeowners to stay put rather than move. The company estimates that approximate- ly 700,000 additional remodeling projects will happen this year, and in coming years, as a result. Remodeling Outlook Market Grew 10% Last Year; 3% Growth Expected for '19 Green Building Consumers willing to pay more for energy- efficiency upgrades New research finds that a large majority of residential customers—who are driven by cost savings and environmental impact— are prioritizing energy efficiency in home projects and are even willing to pay more to achieve those energy goals. The research—conducted by Washington- based trade group Propane Education & Research Council—found many homeown- ers and contractors now seek energy-efficient homes. Also, it revealed that construction professionals anticipate "green" homes to see substantial upcoming growth. Seventy-eight percent of remodelers, 87 percent of buyers, and 89 percent of builders say it was a "very high" or "some- what high priority" for their new home or remodel to be energy efficient. Eighty-one percent of remodelers, 88 per- cent of buyers, and 96 percent of builders state a willingness to pay more to make their building or remodeling project more energy efficient. Roughly 90 percent of professional build- ers and remodelers report that clients "always" or "sometimes" ask about ener- gy-efficient construction methods. Two-thirds of construction professionals expect the demand for "green," sustainable or energy-efficient homes will "significant- ly increase" over the next five to 20 years. Energy efficiency, indoor air quality are top 'green' preferences A separate study of new and prospective homebuyers finds that when buyers think of a green home, they think of features that will first save energy and second improve the quality of the air in a home. The survey—conducted by NAHB of 4,000 people—finds that to achieve their energy-efficiency goals, buyers seek windows and appliances that are Energy Star-rated, efficient lighting and insulation higher than required by code. In terms of indoor air quality features, more than half of the respondents deemed the following to be "essential" or "desirable": a home dehumidification system, an electronic air cleaner, and building and finishing ma- terials that have low volatile organic com- pounds (VOCs). REMODELING SPENDING, $BILLIONS $450 2007 $284.9 $270.5 $233.1 $215.0 $247.1 $237.3 $240.3 $265.4 $282.4 $303.8 $345.1 $377.9 $389.8 $400.9 $404.1 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018P 2019P 2020P 2021P $400 $350 $300 $250 $200 $150 $100 $50 $0 Burns Residential Repair and Remodel Spending™ Small-project discretionary Big-project discretionary Disaster repairs Note: Includes labor and materials 10% IN BRIEF 8 March 2019 QualifiedRemodeler.com

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