PROFITS: Market Forecast | By Rob Heselbarth
Photo: Donatelli Builders
REMODELING to GROW
by double digits in 2014
The remodeling market is in a strong position after experiencing
double-digit growth in 2013. Double-digit growth is expected for 2014, too,
and remodelers are ready to grow in smart, controlled ways
R
emodelers are
expecting a good
2014. In fact, 78
percent of those
who responded to
Qualified Remodeler's annual
online market forecast survey
reported having either an
excellent or good outlook on
the year ahead. This is an
improvement over the 61 percent
who felt this way one year ago.
The sentiment supports the
double-digit growth predicted
for 2014 by the Joint Center for
Housing Studies' Remodeling
Futures Program at Harvard
University. Harvard's Leading
Indicator of Remodeling
Activity, however, calls for a
slowdown in growth toward the
middle of 2014, but to levels that
will remain healthy.
In late October 2013, the
National Association of Home
Builders' Remodeling Market
30
January 2014
QR
Index — which measures
remodeler confidence —
stood at 5, the highest rating
since 2004.
Expectations of growth come
with fears and doubts, however.
Remodelers responding to our
survey rank the biggest threats
to growth in 2014 as follows: the
economy in general; consumers'
fears; the availability of skilled
labor; government regulation;
and material prices.
Growth might not be guaranteed, but if past performance
is an indicator of future activity,
remodelers can expect a profitable year. Survey respondents
tell us that profit margins are at
healthy levels. The bulk of remodelers (45 percent) report margins
between 16 and 50 percent. Only
11 percent of remodelers report
margins of 5 percent or less.
"Around here homeowners
retain the mind-set that they
ForResidentialPros.com
What was your company's average
% net profit margin in 2013?
0
Margins of more than 75%
0
Margins of 51-75%
20
Margins of 26-50%
25
Margins of 16-25%
19
Margins of 11-15%
24
Margins of 6-10%
11
Margins of 0-5%
can get a job done for any price
they want, just by telling remodelers they have to come down
to the lowest bid," says Stephen
Gidley, GMB, CAPS, CGP, CGB,
CGR, CPRC, CR, president and
CEO of Stephen C. Gidley Inc.,
Darien, Conn. "The only way to
combat this mind-set is honestly
and openly. For example, I take