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Looking back a year

Looking back a year. According to the 2016 Houzz State of the Industry Report, the general contractors (GC)/remodelers/builders category experienced a 12% increase in 2015 revenues while the specialty – building & renovation category achieved a 14% increase.

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Looking back a year

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  1. Looking back a year • According to the 2016 Houzz State of the Industry Report, the general contractors (GC)/remodelers/builders category experienced a 12% increase in 2015 revenues while the specialty – building & renovation category achieved a 14% increase. • Of the GCs/remodelers/builders surveyed for the report, 20% said their 2015 revenues increased 25% or more. In the specialty category, 21% said revenues increased 10–14%; 18%, 15–24%; and 14%, 25% or more. • Because of the typical seasonal effect, the 3 components of the Houzz Renovation Barometer had the lowest scores during Q4 2015, but for the year the number of inquiries, number of new projects/orders and their size scored in the 70s for remodelers.

  2. Looking forward a year • According to the new John Burns Real Estate Consulting report, residential repair and remodel spending will total $300.5 billion during 2016, a 7.8% increase from 2015. • Big-project spending (more than $5,000) would increase 7.2%; owner-big-spending, 10%; and renter-big-spending, 3.8%. For small projects, overall spending would increase 8.6%; owner-small-spending, +9.4%; and rent-small-spending, +2.8%. • According to the Houzz Q4 2015 Renovation Barometer, the Q1 2016 score for GCs/remodelers was 77, rebounding from 65 for Q4 2015. The specialty category’s Q1 2016 score was also 77, compared to 66 for Q4 2015.

  3. Helped by Healthy Existing-Home Sales • Although owners of new single-family homes and condominiums may have projects for remodelers, it’s the purchasers and owners of existing homes that drive remodeling. • During 2015, existing-homes sales increased 6.5% to 5.26 million units, the most since 2006, but approximately 25% less than the 7.08 million units sold during 2005. • Existing-home sales started very well this year, with a seasonally adjusted annual rate (SAAR) of 5.47 million units for January, but then decreased 7.1% during February to a SAAR of 5.08 million. Nonetheless, sales increased 2.2%, compared to last year.

  4. Market Makers & Movers • According to the March 2016 Bankrate Money Pulse survey, adults, 18–29, are the largest age group most likely to improve their homes during the next 12 months, at 37%; followed by adults, 50–64, 30%; adults, 30–49, 28%; and adults, 65+, 21%. • Despite the 65% of homeowners 49 and younger planning to improve their homes during the next 12 months, the 50+ age group may be the best target for remodelers, as 42% of the heads of households in the US are adults, 55+. • Another reason for remodelers to focus on the older Generation Xers and Baby Boomers is that the luxury remodeling market, or those households with the highest incomes, is spending at a much higher rate than middle and lower income homeowners.

  5. Costs, Labor and Leads • According to the 2016 Houzz State of the Industry report, GCs/remodelers/builders’ top 2016 challenges will be the increased cost of doing business, 37%; shortage of subcontractors, 35%; and consumers overly concerned about project costs, 34%. • It was similar in the specialty – building & renovation category: increased cost of doing business, 37%; difficulty hiring/being understaffed, 34%; and consumers overly concerned about project costs, 31%. • Among the top 200 home improvement pros in Qualified Remodeler’s 2015 HIP 200, 23% said their top opportunity for 2016 was an overall higher volume of leads for new business. Adding a new or expanded service area was second at 14%.

  6. Advertising Strategies • With referrals the most effective marketing tactic for remodelers, they should promote a “Neighbor Project” program. For each paying-customer referral a current customer provides, he or she and the referral receive a discount or substantial home gift. • Since outdoor living projects – decks, patios or landscape – are the top choice among homeowners, remodelers can generate new project leads with the incentive of a new grill, smoker, lighting package or special discount from a local furniture store in a co-promotion. • Remodelers can effectively and successfully target Baby Boomer homeowners – and especially the luxury renovation market – with a combination of television and newspapers or television and direct mail.

  7. New Media Strategies • Remodelers should make a major commitment to hiring a professional photographer and/or videographer to populate their Websites with the high quality photos and videos that homeowners say are important Website elements. • May is National Remodeling Month, which provides remodelers with many topics for social media and/or blogs: emphasizing the value of an exterior home inspection, the importance of roof repair/replacement as it protects the entire home and aging-in-place ideas. • To attract young homeowners, start a “See It Now” mobile promotion with live video from a project site, using Periscope. Invite viewers to visit to talk with the remodeler and see the build quality. Incentivize with an appropriate coupon (Starbucks, Panera Bread, etc.)

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