Checking the Economic Forecast for Remodelers in 2019
The remodeling industry is enjoying a business boom and tremendous growth. But there are few warning signs that your roll may slow some in 2019, and there are factors to take into account as you work your business plan this year.
Rising prices will complicate the continued growth of the remodeling market — analysts say not to look for double-digit gains this year. Materials costs keep rising — lumber and other raw building materials, as well as the finishing touches such as appliances and fixtures. Add in the rising labor costs as skilled workers become even more valuable, and you’ll have to raise prices to keep your margins reasonable.
Polish Up Your Defense
As always, your current customers are your best defense — the ones who do multiple projects with you and give great recommendations, referrals, and reviews. If you’re not contacting them regularly with a newsletter — via email or mail — get a plan together to implement that now.
When you’re meeting with new leads and cleaning out your backlog, a good offense is going to be your best defense — let your prospects know why your prices are coming in higher than they may expect. Transparency is the best policy, and is increasingly demanded by consumers at all levels.
Who Will Be Remodeling
A good part of the market will be driven by Baby Boomers. But the projects will change. The Harvard University Joint Center for Housing Studies says approximately only 3.5% of Boomers live in homes that are suitable to stay in as they age. So Aging in Place is going to grow as part of the remodeling business. If you want a piece of that business, position yourself as a knowledgeable resource about Universal Design and Aging in Place in your marketing.
With home values finally recovering from the losses of the last decade, more homeowners are willing to invest in their houses with a remodel again, says the Harvard Joint Center. Industry analysts say these projects will likely be smaller than in the past five years, with fewer large additions and more improvements to existing spaces like kitchens, baths, and basement finishing.
Watch the Scale
We’ve seen many remodelers scaling up during the last three years. If you’re in growth mode, great, but keep an eye on your forecasts and trend lines. If business levels off, and you’ve scaled for continued growth, get a plan together now for how you can best scale down without hurting your profits.
By all indications, the outlook for remodelers is still good in 2019 — but keep your eyes on the long-term forecast and economic trends to keep your business strong and profitable.