Remodeling roller ceaster

By Bill Greene, CRA President National Association of the Remodeling Industry

FlesPlrE the ongoing housing

Yand real estate slump, the professional remodeling industry continues to show strength. The latest Census Bureau report shows high maintenance and repair expenditures for homeowners, with experts anticipating year-end figures reaching over $111 billion crease since 1989.

Most NAR.Imember contractors report slow but steady business. Many contractors find themselves looking for their next job as they put the final touches on the job they've just finished. This lack of a job back log will be an important factor as we head into the colder months when business generally slows until spring. In times such as these. homeowners tend to maintain with hard-earned money being spent on repair and replacgment rather than on major, "non-necessary" remodeling projects. In fact, this movement towards repair and maintenance has given some remodeling firms the chance to make up for lost business by opening separate handyman divisions. These operations are devoted entirely to projects that a homeowner must repair due to everyday rlear and tear on a home. Jobs such 4s these may have been tumed down during more prosperous times, but are now welcome.

While overhead costs have remained stable, many remodelers have had to lower their profit margins to remain competitive. This, of course, means that smaller eontractors have a more difficult time withstanding the storm than larger firms. What has helped the professional remodeling contractor is the vast array of new building industry prqducts and product lines that have made previously custom products standard. These new products have allowed homeowners as well as contractors to become much d-i-y consumef market will grow by about 7 million households during the rest ofthe l990s.

Given time pressures faced by most families, we anticipate the trend to buy-it-yourself and have someone else do the work will continue.

Story at a Glance

Real sales increases of 3o/o (adjusted for inflation)...compound'annqal sales growth of 3% (real dollars) through 1995...7 million more households in d-i-y consumer market...retail home improvement business will improve in '92.

Financial pressures, begun in the 1980s and exacerbated by the latest recession, may cause homeowners to delay or scale back some big-ticket home improvements, but we believe this is a short-term circumstance. Long terrn, homeowners have good reason to maintain and improve their homes: a home is the biggest asset on most personal balance sheets.

Story at a Glance

Professional remodeling industry continues to show strength...new building products allow cost effectiveness ...tighter cash flow hampers contractor buying power.

more creatlve...

While recovery seems to have taken a foothold in the West. remodelers in other regions continue to ride the roller coaster of economic ups and downs. I believe these inconsistencies will continue through 1992. I believe remodelers will see steady work with perhaps occasional quiet weeks during the winter months. This will, of course, lead to reduced cash flow and buying power. Little to no product inventory will be kept on hand since cash flow will be tight and profits lower. This means remodeling contractors will be paying a little more per item for smaller quantitiesjust enough to get through the presentjob.

We can only hope th4t lending institutions will continue to loosen up on credit and, keep interest rates low.