Qualified Remodeler Magazine

APR 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 10 of 102

CAMBRIDGE, MASS. — The home remodeling market expanded by more than 50 percent since the end of the Great Recession, according to "Improving America's Housing 2019," a new report by the Harvard Joint Center for Housing Studies. The report finds that, as homebuilding struggled to meet the nation's growing hous- ing needs, spending on improvements and repairs to both owner-occupied and rental properties hit a record of nearly $425 billion in 2017. "With new construction slowly recovering from historic lows, 40 percent of the country's 137 mil- lion homes are at least 50 years old," says Abbe Will, associate project director in the Remodeling Futures Program. "The aging of the housing stock has been a boon to the remodeling industry, with spending surpassing investment in homebuilding every year for over a decade, contributing 2.2 percent to US economic activity in 2017." The uptick in house prices in many markets and the aging pop- ulation are also driving increased spending on home improvements and repairs. Rising prices mean growing home equity, which pro- vides owners both the incentive and the means to undertake more and larger projects. Additionally, older households have higher homeownership rates than young- er households, and many have the resources to afford major renovations, including accessibility modifications. Households 55 and over account for half of all improvement spending by homeowners today. The number of owners under 35 is finally showing signs of a rebound, and so is their remodeling spending. Younger households contribute significantly more to local im- provement spending in many metros across the Midwest and the South, where owning is more affordable than in high-cost metros on the East and West Coasts. To pay for home improvements, homeowners relied largely on savings, even for major projects; more than half of projects costing $50,000 or more in 2017 were funded by cash. Expanding the ability of owners to pay for improvement projects over time—whether through home equity loans or lines of credit, cash-out refinances or contractor-arranged financing—would generate considerable growth in the remod- eling industry. "Over the next decade, the strong preference of older homeowners to age-in-place and the increasing difficulty of building affordable housing in many markets will continue to hinder the construction of new homes," says Kermit Baker, director of the Remodeling Futures Program. "The remodeling industry will therefore retain its critical role in helping the country meet its housing needs." Qualified Remodeler is owned by SOLA Group Inc., which supports the Remodeling Futures Steering Committee, which produced this report. Industry Outlook Remodeling Up 50% Since Great Recession Remodeling Distribution Harvey Building Products on spree since acquisition For decades, Harvey Building Products has been a supplier of windows, doors and other products from Boston to Washington, D.C. Today, its footprint is much bigger. It now serves 45,000 mostly repair and remodeling firms in 40 states. The transformation has occurred in three short years following its acquisition through an investor group led by Dunes Point Capital. Since then, Harvey has been on an acquisition spree of its own. Beginning in January 2016, the company acquired SoƁ-Lite Windows with a significant foot- print in the Midwest. Then, in March 2018, it purchased Thermo-Tech Windows and Doors based in Sauk Rapids, Minnesota, and finished out the year with the acquisi- tion of Northeast Building Products, based in Philadelphia. Qualified Remodeler recently interviewed Harvey's leadership—CEO Jim Barreira; President and COO Nick Longman; and Vice President of Marketing Matt Samson—to talk about the changes and the implications for its many remodeler customers. Q: Can you bring us up to speed on the acquisitions? Barreira: We have been acquiring win- dow manufacturers, Northeast Building Products being the most recent in De- cember of 2018. With that acquisi- tion we are in about 40 states—all the way out to Colorado and down into Texas and Florida, as well as the Midwest and our traditional markets. Harvey alone has about 40,000 customers, and our new sister orga- nizations add another 5,000—including some large national players. We are some- where around 80 to 85 percent pro remod- eler type of customers, general contractors, builders, etc. We are still very much R&R [repair and remodel] focused. For instance, Northeast Building Products is probably 99 percent remodeling focused. IN BRIEF 10 April 2019 QualifiedRemodeler.com

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