December 2015 Remodeling Business Pulse Tracking Remodeling Conditions & Outlook. Conducted by:

Transcription

1 December 2015 Remodeling Business Pulse Tracking Remodeling Conditions & Outlook Conducted by:

2 Table of Contents Page Research Objectives & Strategies 3 Questionnaire Outline 4 Methodology 5 Executive Summary 6 Detailed Findings Remodeling Business Pulse 10 Current Conditions 11 Future Conditions Projections 27 Remodeling Trends 30 Appendix: Verbatim Comments on Sales 37 2

3 Research Objectives & Strategies Objectives Gain a quarterly measure of the current health of the industry and outlook for the near term Provide insight on specific business issues Use in lobbying efforts and to inform NARI members Strategies Get high levels of survey participation by making survey: Quick to complete Require no upfront time to gather data Use one scale as much as possible to make responding easier Allow respondents to express both the direction they think things are heading and the strength of that change Add questions focused on a selected business issue(s) 3

4 Questionnaire Outline Overall rating of current conditions Breakout of current conditions on inquires, requests for bids, conversion to jobs, sales value of jobs sold Outlook for conditions three months from now Reasons for favorable or unfavorable outlook Comments on the future Questions about Overall percentage change in sales forecasted for 2016 Identification of key remodeling trends 4

5 Methodology Survey conducted online December 11 20, ed initial invitation and two reminders to 530 members who were in the NARI Research Panel 153 completed interviews 28.9% completion Median time to complete 3.7 minutes Questions regarding 2016 sales change and trends added 1.8 minutes (included in the total) Unless otherwise noted, the base size for each result is 153 Rating scales used are almost always 1 to 9 with 1 being the most negative and 9 the most positive. 5 was labeled as neutral for almost all of these questions. Where statistical significance is referenced, it is at the 90% confidence level. When directional is mentioned, that means that the difference is not statistically significant. 5

6 Executive Summary 6

7 Remodeling Business Pulse 4th Quarter 2015 The 4 th quarter Remodeling Business Pulse points to a moderate rate of remodeling growth in the 4 th quarter of 2015 and 1 st quarter December ratings for current conditions increased slightly from September. While the 6.05 still reflects growth (above a 5 rating), the rating was one of the lowest we have seen in the 16 waves of this study. All the sub-components of current conditions except one were down in December. None of the changes were statistically significant, but two were almost at that level. The two changing the most were the declines in Number of inquires and Requests for bids. The Value of jobs increase was very small, but added to its position of being the strongest of these measures. Here are the ratings and the change versus the September study: Number of inquiries was at 5.73, down 4.8% Requests for bids came in at 5.77, down 4.6 %. Conversion of bids to jobs was 5.75, down 1.0%. Value of jobs was 6.21 an 0.3% increase. There is very little differentiation in ratings between Number of inquires, Requests for bids and Conversion of bids to jobs. While Conversion of bids to jobs had clearly been the weakest factor, that is no longer the case. Strength of sales in 3 months at 5.98 and was down significantly from the 6.32 in December of last year. (Comparisons for this measure are made against the study s results for same period in the prior year.) This is the second quarter of back to back significant declines. While this points to slower growth, with a rating above 5, this is still an indicator of increases. Looking at expected conditions 3 months from now, continues to show a majority (58%) of remodelers expecting growth while a much smaller group (14%) seeing some level of decline. The balance (28%), see sales being about where they were last year. While still positive, those seeing growth are 4.2 times those seeing declines in this wave while a year ago that ratio was more positive at 7.4 times. Growth is being driven by several factors. People needing to do projects that had been postponed remained #1 at 63%, up slightly from September. Home prices improving and Economic growth tied for #2 at 48%. Home prices fell slightly as a driver and Economic growth grew vs. September. The expectation of higher interest rates clearly contributed to a drop in low interest rates being a driver of growth. It fell from 45%, down to 34%. 7

8 2016 Growth Projections With 2016 starting shortly after the fielding of this study, respondents were asked about their anticipated sales change. Responses were very positive. The average change projection was for growth of 13.1% in Eighty percent of the respondents forecast growth versus only ten percent seeing declines. The remaining 10% see sales being about the same as 2015.

9 Key Trends In Remodeling A very broad range of answers were given in response to an open-ended question about trends in what customers want in their remodeling projects. Three overall areas were strongest. Home factors, at 38% of responses, was the most popular. Universal design and core kitchen and bath remodeling were the leading specifics. Project features was second at 33%. Energy savings, showers enhancements, and higher end products were important specifics. Price/Value was identified as a trend in 13% of the mentions. A drive for low price and value were most top- of-mind.

10 Detailed Findings Remodeling Business Pulse 10

11 Current Conditions 11

12 Rating of current business stayed almost the same as found in September. It is however down from higher levels seen earlier in How would you rate your current sales compared to the same time last year? , 16% 7, 16% 9, 11% Dec 15 1, 1% 2, 1% 3, 6% 4, 14% 5, 18% 6, 16% % by individual rating 1 to 9 Ratings are from 1 to 9 where 1 = Much Worse, 5 = About the Same, 9 = Much Better 12

13 Number of inquires: Weaker results. A strong directional drop after a statistically significant fall in September. Compared to the same time last year how would you rate the following items that impact sales? Number of Inquires Mean , 20% 1, 0% 2, 3% 3, 6% 9, 3% 8, 11% 6, 19% Dec 15 4, 13% 5, 25% % by individual rating 1 to 9 Ratings are from 1 to 9 where 1 = Much Worse, 5 = About the Same, 9 = Much Better 13

14 Requests for bids: Another strong directional decline after a similar trend in September. Compared to the same time last year how would you rate the following items that impact sales? Requests for Bids , 17% 8, 12% Dec 15 1, 0% 2, 3% 9, 4% 3, 7% 4, 13% 5.4 5, 20% 6, 24% % by individual rating 1 to 9 Ratings are from 1 to 9 where 1 = Much Worse, 5 = About the Same, 9 = Much Better 14

15 Conversion of bids to jobs: Has held in at similar levels since last March. Compared to the same time last year how would you rate the following items that impact sales? Conversion of Bids to Jobs , 18% Dec 15 1, 0% 2, 3% 9, 3% 8, 10% 3, 3% 4, 10% 6, 20% % by individual rating 1 to 9 Ratings are from 1 to 9 where 1 = Much Worse, 5 = About the Same, 9 = Much Better 5, 33% 15

16 Sales value of jobs sold: A very slight upturn in December. Compared to the same time last year how would you rate the following items that impact sales? Sales value of jobs sold , 14% 7, 24% 9, 8% Dec '15 1, 1% 2, 1% 3, 2% 4, 8% 6, 19% 5, 24% % by individual rating 1 to 9 Ratings are from 1 to 9 where 1 = Much Worse, 5 = About the Same, 9 = Much Better 16

17 Sales Value remains the strongest sub-measure. Inquires fell enough to be very slightly below Conversion to jobs, which had been the weakest Comparison of Current Ratings Overall Inquires Bid Requests Conversion to jobs Sales Value 17

18 Inquires and bid requests appear to be slowing down in growth. The brightest area is Sales value. It now clearly is strongest of the sub-measures of current conditions. 7.0 Mean Rating (1 to 9 scale) Number of Inquires Requests for Bids Conversion of Bids to Jobs Sales Value of Jobs Sold 18

19 Future Conditions Note: The analysis of future business rating is done by comparing this study s rating to the responses collected at the same time last year. This is different than the approach for the current business conditions where quarter to quarter comparisons appear most appropriate. For more details, consult the March 2015 report. 19

20 Strength of sales in 3 months: A statistically significant drop from An outlook for modest growth. Now we would like your input on the future. Compared to the same time last year, how strong do you think sales will be three months from now? December , 15% 7, 19% Dec '15 1, 0% 2, 1% 3, 5% 9, 4% 4, 8% 6, 20% % by individual rating 1 to 9 Ratings are from 1 to 9 where 1 = Much Worse, 5 = About the Same, 9 = Much Better 5, 29% 20

21 Postponed Projects remained at the #1 growth driver but many drivers declined in importance. Home Prices Improving and Economic Growth tied for #2. Company Improvements continued to be a strong driver. People needing to do projects that had been postponed More certainty about the future Economic growth Home prices improving Low interest rates Improving employment Company Improvement (marketing, sales, etc.) Stock market growing Dec '15 Sept '15 June '15 March '15 Dec '14 Loans easier to get Weather damage related projects Other - please fill in 0% 20% 40% 60% 80% Base 88 (asked of those rating future sales a 6 or higher) Multiple responses allowed 21

22 Other Reasons for Growth We have added additional home improvement lines for our customers to choose from I know we have jobs in the pipeline for '16 New division started in remodeling churches We will be out of the holiday season Better marketing on our part Mystery The above are inputs as supplied by the respondents. Only minor editing has been performed. 22

23 Reasons for Declines The number of remodelers seeing declines in three months was small at 22. Data on a sample this small is not statistically valid, so it is not included in this report. Consistent with previous waves, High Levels of Uncertainty About the Future was the most common reason for forecasting declines. 23

24 Optional Specific Comments About Current or Future Sales Do you have any specific comments about current or future sales? 47 of 153 wrote in a specific comment The largest group were negative comments 37% Positive 19% Neutral 44% Negative Major Positive Themes Bigger projects Making improvements in their businesses Major Neutral Themes Not sure if changes like interest rate hikes will have an impact Major Negative Themes Low quality, low priced competition Presidential elections adding uncertainty Rising interest rates will slow things down See the appendix for verbatim comments 24

25 Regional Responses Two regions failed to meet our target of 30 before reporting, so a regional analysis is not included in this report. Respondents by Region Region June Sept Dec Mar June Sept Dec Mar June Sept Dec Northeast Midwest South West Total

26 Regional Definitions 26

27 Projections For

28 Solid growth is expected by the vast majority (80%)of NARI remodelers. An average of 13.1% growth is forecasted. Looking forward to the full year, 2016, what is your best estimate for the percentage change in your revenues compared to 2015? 2016 Outlook No Change 10% Declines 10% Growth 80% Average forecast +13.1% 28

29 The most common forecast was for 10% growth. 20% was the next most popular. No change, 5%, 15% and 25% all were forecasted with moderate frequency. 30% % of Respondents by 2016 Change Forecast 25% 20% % of Respondents 15% 10% 5% 0% -25% -20% -15% -10% -5% -2% 0% 2% 2% 4% 5% 6% 8% 10% 15% 16% 18% 20% 25% 30% 40% 45% 50% 60% 100%135% Forecast for 2016 Sales Change 29

30 Remodeling Trends 30

31 Important Trends Going Into 2016 As we get ready to enter 2016, do you see important trends in what customers want in their remodeling projects? Please describe each trend that you see. If can't think of any important trends, please respond none. It is important to recognize that the responses were not prompted in any way (unaided). Some of these trends might receive much higher levels of significance if they were given to respondents as part of a list (aided). By its nature, this type of open-ended question received a broad set of responses. 94 of the remodelers in this survey identified at least one trend that they see impacting In total, 132 trends were mentioned. There were 3 major areas of trends. Home Factors were things like: Universal design or aging in place Core kitchen and bath remodeling Project Features were things like: Energy savings Showers; replacing tubs, curbless High quality/luxury products Low maintenance/durable Price/Value were things like: Low price Good value for spending Home Factors Project Features Price/Value 38% 33% 13% 0% 20% 40% % of Responses Received 31

32 Aging In Place/Universal Design Is Attracting More Attention The single most mentioned trend at 11.4% of the mentions, was aging in place or universal design. Examples of the mentions are: Accessibility; safety; aging-in-place improvements; universal design. Aging in Place Needs Universal Design, Aging-in-place modifications, making the whole house livable for the lifetime of the occupant. Somewhat more interest aging in place/accessible design More and more accessibility with Universal Design 32

33 Core Kitchen and Bath Remodeling Is Strong The second most often mentioned trend at 10.6% of responses was strength in core kitchen & bath remodeling Some examples of expressions of this were: Kitchen and Bathrooms still popular. bathroom remodels - removing tubs and installing larger showers - was very powerful in 2015 and I see it continuing. More storage in bathrooms. We have also seen an uptick in requests for partial kitchen upgrades such as countertops, tile floors, etc. Upgrade existing kitchens and baths Older homeowners, particularly empty nesters, are looking for solutions that update kitchens without breaking the bank in anticipation that they will be downsizing in the near future. 33

34 Changing/Adding Showers Appear Hot At 7.6% of mentions, shower work appear to be popular. Examples of shower mentions include: Removing tubs in master baths & opting for larger showers. Open walk in showers Tub to shower conversions without curb Curb-less showers We are seeing more bathroom remodels removing tub and shower to make room for one large walk-in shower. Master bath remodels--larger showers, remove tubs 34

35 Energy Savings Are Popular Energy savings efforts are high on the list at 6.1% of responses Some examples of energy savings types of inputs were: Energy, sustainability led lighting Energy saving devices added Closing in large 2-story foyers & great rooms for better energy efficiency. My clients are more and more wanting a house that is low upkeep, efficient, and even, 'off-the-grid'. Better lighting. Energy efficient led lighting Lighting control systems, used more LED lights 35

36 Also Popular Are The Experience of High End/Luxury Products There were frequent, 6.1%, mentions of higher end luxury types of products being wanted incorporated into projects. Some examples of these higher end trend comments: More luxury items. Higher end client selections They expect higher quality, done faster. Price is still an issue but more people are asking for larger projects. High end finishes seem to always be wants, but budgets simply do not always allow for that. Its working the magic to incorporate those items in to still give the final product the same fit and feel. Customers want very high end finishes. More expensive projects Smaller homes / highest quality More attention paid to design - aesthetics and quality

37 Fred Miller President, Consumer Specialists