Just as with the economy at large, 2008 and 2009 were extremely difficult for the remodeling industry. Many companies, both contractors and manufacturers alike, were forced out of business. A tremendous number of jobs were lost while consumers seemed to have gone into hiding.
As the stock market climbed throughout 2009 the owners of many home improvement companies hoped that this was perhaps a positive indicator that their fortunes may improve soon as well.Would improving mutual fund statements translate to increased spending by homeowners? Would rising corporate profits mean that banks would loosen the purse strings on the home equity lending that fueled so many home improvements over the past decade?
Now that we are halfway through 2010, I wanted to weigh in with my opinion on this. As someone whose business' very survival depends on homeowners feeling comfortable investing in their homes, this is something I have been watching VERY closely and something that I feel well qualified to talk about.
First, to answer the big question, YES... the overall improvement in the economy has translated into an improved climate for remodeling companies. Legacy Remodeling saw business roughly double each month this year when compared to the same month in 2009. Customers have been investing in high efficiency windows as well as high quality home exterior products. It seems that many people put off required maintenance such as windows and roofs and are now feeling comfortable getting off the fence and making a purchase.
However when you break down the improved conditions, there is still a bottleneck for financing large projects. This is not entirely bad news however. It has been our experience that recently people who seem to be qualified have begun to have better luck in obtaining finance. Prior to the recession, everyone could get a loan. That is no longer true, although that is not necessarily a bad thing. I would expect that moving forward there will be more responsibility in lending. Also, with the current record low interest rates on mortgages, certain large home improvement projects can be financed on very favorable terms, although once again, being well qualified is a must.
Additionally the proportion of our projects that I would classify as "needs" (Pittsburgh replacement windows, roofs, doors, etc.) is still a higher percentage of our business compared to the projects I would call wants (new siding, sunrooms, etc.) than what we would traditionally expect. As the recovery continues and consumer confidence continues to increase, it is my expectation that these more discretionary purchases will increase as well.
Lastly we have seen an increased number of design build projects (porch roofs, room additions, etc.) when compared to last year. This is something that I believe can be attributed to a combination of an improving economy and people's desire to maximize their current home rather than incur the cost of moving to a bigger home.
If you are someone who has been considering a home improvement project but were unsure of the timing, I would suggest that this is a great opportunity. Many companies are still willing to negotiate very aggressively to earn a customers business right now but this will be less as the economy continues to improve, particularly with the fall season right around the corner when good companies traditionally get busier.
Tags
Subscribe to Legacy Remodeling's Blog
Comments