Qualified Remodeler Magazine

OCT 2015

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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Similar analysis was conducted to tease out the amount of remodeling activity that is related to professional labor. According to the Burns model, in 2014 $108 billion was spent by professionals on building materals, $69.3 billion was attrib- utable to DIY expenditures, and $88.2 billion was the amount of the total ($266 billion) assigned to professional labor. "Te Harvard numbers do a great job getting a visible mix of how many projects are pro versus DIY," Tomalak says. "Obviously, DIY is mostly materials. So what we did to get the labor portion out of the pro sector was look at a planning and more decision makers were required (both spouses instead of one), Tomalak explains. "We divided proj- ects qualitatively by high-time involvement and low-time involvement. Ten we separately created a series of price curves, and we looked at the project fall-of rate. Certain projects are more price sensitive and when the price goes up we see fewer projects. And certain projects have a fatter price curve, meaning they tend to be less price sensitive. When we looked projects both of these ways, it turns out they both kind of converged around the $5,000 mark." 2007 2008 2009 2010 2011 2012 2013 2014 2015P 2016P $250 $200 $150 $100 $50 $0 30% 20% 10% 0% -10% -20% Billions $USD % Growth YOY Burns Residential Repair and Remodel Spending: Owner Occupied Remodels ■ Owner Big Projects ■ Owner Small Projects ■ Owner Disaster Repairs % Growth YOY Big Project Owner Remodeling Growth Source: John Burns Real Estate Consulting LLC; FEMA (Data: July-15; Pub Aug-15) Owner big-project remodel spending bottomed out in 2011 and has been slowly improving since that time. Big project spending is forecast to grow 5.6% in 2015 and 10.0% in 2016. Owner R&R; spending is forecast to reach $222.1 billion in 2016. Source: John Burns Real Estate Consulting LLC, 2015. Big-project owner remodeling growth will include 2.0% more projects and 7.9% higher spending per project in 2016. 2014 increase from 18% increase in small-ticket maintenance spending, driven by deferred repair projects from prior years 0.9% Growth in owner households 1.1% Growth in big-project remodels per household 1.7% Inflationary price increase 6.2% Trade-up in project type and product mix $72.9 Billion 2016 forecasted big-project R&R; spending 7.9% Increase in spending per remodel 2.0% Increase in big-project remodels $66.3 Billion 2015 baseline big-project R&R; spending SPECIAL REPORT: Industry Research 22 October 2015 QR QualifiedRemodeler.com

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