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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lead to mobility and housing turnover that drive the remodeling market. "When we look at published work that is out there, it tabulates the AHS data and shows that mobile house- holds generally spend more. We don't disagree," he says. "However, when it is a question of whether it is a driver — the primary driver — what we learned is mobility tends to happen when times are good. Home prices are rising. Incomes are improving. Other things are going on. And sample basket of various projects that ft into that category, then conducted dollar weighting by market size." For many years, industry watchers have looked to ex- isting-home sales as an indicator of future remodeling activity. Many respected studies of American Housing Survey data back this conclusion. But Tomalak says the Burns team's work suggests the relationship is more nuanced; existing home sales should not be labeled as universally good or bad. It is really the conditions that 2007 2008 2009 2010 2011 2012 2013 2014 2015P 2016P $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Billions $USD Burns Residential Repair and Remodel Spending: Rental Remodels ■ Rental Big Projects ■ Rental Small Projects ■ Rental Disaster Repairs Source: U.S. Census; John Burns Real Estate Consulting LLC; National Apartment Association, Harvard JCHS (Data: July-15, Pub: Sep-15) JBRC expects rental big-project remodel spending to nearly double from 2010 levels in 2015 and 2016. This is driven by a higher volume of single- family rental units, property appreciation, and flat capital rates. Rental remodeling will grow 7.1% in 2015 and 3.5% in 2016. 2011 increase in big-ticket rental improvement from over 1 million new rentals and higher property valuations, as reflected in cap rates 2007 2005 2008 2006 2009 2010 2011 2012 2013 2014 2015P 2016P $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 Burns Residential Repair and Remodel Spending: Rental Remodeling Outlay per Rental Unit Source: John Burns Real Estate Consulting LLC (Data: July-15, Pub: Sep-15) Note: Above values are nominal, not adjusted for inflation. Larger, big-project remodels of rental properties have been increasing since 2010. Increased single-family rental volume has resulted in higher levels of expenditures versus prior cycles. Rental remodeling spending will break records in 2015, driven by rental appreciation. $1,364 $1,493 $1,506 $1,412 $1,277 $1,126 $1,242 $1,435 $1,513 $1,565 $1,620 $1,654 SPECIAL REPORT: Industry Research 24 October 2015 QR QualifiedRemodeler.com

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