The New Normal: The Current Remodel Market and Why it Matters to You

Trends

 

Image-219x300Strite design + remodel was recently recognized by two leading industry publications as one of the top 500 remodeling companies in America.  We cracked the prestigious national ranking in Qualified Remodeler at 474 — the only Idaho-based, full-service remodeling company to earn this distinction.  We also learned that we were ranked 196 in the category of “full-service remodelers” in Remodeling magazine’s list of the Top 550 U.S. companies in our industry

With an estimated 650,000 companies engaged in some form of remodeling, according to a recently published study by Harvard University, earning a spot among the top 500 in either of these publications is a tremendous honor — especially in a market of our size, and in the wake of such a severe downturn in the housing industry.

That downturn is something that has been felt far beyond our own Treasure Valley.  In its assessment of the current remodeling market, Qualified Remodeler observed:

The economic and housing trends that began in 2008 have become the new reality for most remodelers — not just a temporary downturn but part of a trend that will likely endure for the foreseeable future…many are saying the current economic adjustment is unlike any they have ever experienced.

We’d have to agree with Qualified Remodeler on the challenges that the last few years have presented our industry — which is why our ranking in two top trade magazines is not only a bragging point in its own right, but a validation that our ability to hang tough and stick to a business model we believe in has seen us through to better times.

The surveys conducted by both Qualified Remodeler and Remodeling magazines placed 2011 revenues for Strite at $1,430,513, which served as the basis for their rankings.  This revenue was generated from 70 remodeling jobs in the Treasure Valley for that year, while our projected 2012 revenue has been estimated by the publications to be $1.8 million — a year-to-year increase of 28 percent!

As much as we’d like to take full credit for this accomplishment, a lot of it goes to our market.  In short, the real hero of this story is the Treasure Valley economy.  Qualified Remodeler had an interesting take on the overall remodeling industry environment: “Consumer confidence in real estate has dropped to unprecedented lows.  Now, even if they have money, many people don’t believe their home is the safe haven they once thought it was.  This is a complete paradigm shift that has been overlooked by many.”

While this might be an accurate description of the larger remodeling environment, we think the “paradigm shift” taking place in our local housing market is somewhat different from the one described by Qualified Remodeler.  To begin with, we see the growth in our business as a “lagging indicator” that reflects a more systemic improvement in our local economy.  When you talk to builders and real estate agents, you quickly discover that the evidence of this is more than just anecdotal.  More homes are being sold at higher price points, and more new homes are being built in response to a decline in home inventories.  These are positive signs that demonstrate an uptick in equity.

But there is an even more fundamental trend at work in our market.  Remodeling decisions are no longer being driven by speculation and the desire to “flip” properties, but by a deeper impulse of homeowners to invest in making their homes more desirable places to live for the longer term.  In essence, remodeling has become much more of a lifestyle consideration — which also makes it a much more sustainable business environment for a company like ours.

For our business, the “new normal” is defined by homeowners who have made up their minds to stay in their homes for the longer term, and who have chosen to update key features, such as bathrooms, to reflect changes in their lifestyle — like kids growing up and leaving for college.  These decisions also reflect a deeper commitment to our community.  After all, you won’t easily find a more livable environment than Idaho’s Treasure Valley!

For those who have decided to invest in their homes, regardless of how these investments may affect their equity in the near term, there is good news beyond simply an increase in home values.  Material and labor costs are still at lows that reflect the post-bubble housing market — and financing has become more readily available at lower interest rates.  How long this convergence may last is anyone’s guess, but in the meantime the climate is an excellent one for investing in ones home as a reflection of ones lifestyle priorities.  If we owe our success to anything, it’s to the growing confidence of our customers that these investments should focus on quality rather than a “quick return.”

To show you how some of our customers have chosen to approach their lifestyle investments, we invite you to take a look at many of our articles. Not only will they give you an appreciation for how we go about realizing our customers’ home improvement visions, we also think they just might inspire you to realize your own.