A recovering economy is great news for the majority of Americans, though for many remodelers, it is a sign they might need to adjust the way they do business … again.
The economic downturn forced remodelers to adopt new strategies to survive in a changing market — strategies that generally led to sustained profit growth.
The newly released 2017 Remodelers’ Cost of Doing Business Study shows that the average gross profit margin for remodelers increased from 26.8% to 28.9% between 2011 and 2015. Average net profit margin increased as well, rising from 3.0% to 5.3% during that same period.
Now that spending is back up and consumers are increasingly interested in buying new (or newer) homes, remodeling expenditures are likely to grow at a more gradual pace than in recent years, according to comments made in January 2017 by National Association of Home Builders economist Paul Emrath during a press conference at the International Builders’ Show.
That means remodelers will have to identify new ways to maintain their share of the market.
“Pacific Northwest consumers are tech-savvy and community-minded,” said National Association of Home Builders Remodelers member Joseph Irons, CAPS, CGP, GMR, a remodeler from Shoreline, Wash. “We’ve reduced costs while growing our business by focusing on social media outreach and community service over traditional advertising.”
The Remodelers’ Cost of Doing Business Study assesses the growth, viability, and demographics of the remodeling industry. The 2017 study was conducted through an online survey sent out to 5,700 residential remodeling/rehabilitation firms across the country in the spring of 2016.
The full study is available for purchase at builderbooks.com. National Association of Home Builders Remodelers members are eligible for a 20% discount off the member price.