We’re now three-quarters of the way through 2018 and MBS Interiors is exploring market conditions and how residential remodeling growth has been affected so far this year. We’re covering the State of the Industry from the perspective of U.S. residential renovation and design businesses, the Residential Remodeling Index, economic factors, and primary indicators for future growth.
State of the Industry
Each year Houzz Inc., a home remodeling and design platform, releases a State of the Industry survey, compiled by collecting findings from nearly 3,400 U.S. residential renovation and design businesses to provide an outlook on 2018 and review of 2017 performance. According to Houzz, attitudes remain favorable with more than 66-percent of surveyed companies citing positive outlooks for 2018, expecting the demand for their services to improve this year. However, Houzz findings also note that the outlook for the national economy appears to be polarized. At least a quarter of companies in each industry group expect the national economy to improve (25-38-percent), while a meaningful share expect conditions to deteriorate (12-28-percent).”
Residential Remodeling Index
Metrostudy recently released its Residential Remodeling Index (RRI) for 2018 Quarter 2 with encouraging findings, including that residential remodeling activity rose 1.3-percent nationwide since Quarter 1. According to Metrostudy, “The RRI as of the second quarter of 2018 stood at 114.4, its highest ever reading. The number means the economic conditions known to influence remodeling activity are 14.4-percent better than the old peak in early 2007, just before the Great Recession. As of the second quarter of 2018, the RRI was 5.2-percent above the year-earlier level.” With employment growth and home equity reaching record levels, investment in home remodeling is expected to continue the pattern of steady growth through 2019, solidifying professionals’ outlooks that 2018 would be a successful year for remodeling.
Promising Future Growth
According to the latest data from the 2016 American Community Survey, “The median age of owner-occupied homes is 37 years.” Simply put, owner-occupied housing stock is aging. “This aging housing stock signals a growing remodeling market, as old structures normally need to add new amenities, or repair/replace old components. Rising home prices also encourage homeowners to spend more on home improvement.” With more than 50-percent of owner-occupied homes being built before 1980, these statistics mark a promising trend for remodelers who can expect high demand in the future.
Overall, it’s a great year thus far for remodeling professionals. 2018 has been marked by record setting economic conditions, employment growth, and gains in home equity. However, even professionals who are currently experiencing positive growth appear to be keeping a close eye on market conditions, cautious with expectations that labor availability and costs could worsen. Yet the fact of the matter remains that as the U.S. housing inventory ages, remodeling will continue to experience high demand as homeowners will need to maintain aging homes, and improvements will need to be made to keep homes updated and attractive to future buyers.