As we turned the corner heading into 2019 earlier this month, the outlook among many remodelers was wishfully rosy to cautiously gloomy. In a survey of its membership (2,500 remodelers, home builders, and contractors), GuildQuality found that 84.3% of respondents said the state of the market in the last quarter of 2018 was "Good" or "Excellent," up 1.7% from the third quarter. But as they headed into 2019, more than 17% of remodelers and contractors anticipated a market decline. This was the highest percentage of doomsday forecasters from the GuildQuality survey since it was first given in 2008.
The prediction wasn't quite as bleak from Metrostudy, but still sobering, in the latest Residential Remodeling Index (RRI). This index is not based on contractor opinion, but rather on studied analysis of a ranger of economic conditions known to influence remodeling activity. According to Metrostudy, the Q3 index was decidedly rosy: 15.7% better than the old peak in early 2007.
Can it last? Not unfettered; clouds are gathering on the horizon. Metrostudy projects annual growth rates to moderate, albeit just a little in 2019, and then a bit more in 2020. But it's not the beginning of the end. Growth will resume in 2021 (around the time demand for new housing begins to tighten). We needn't fret. Instead, we need to stay flexible, turning increasingly towards more efficient and accurate business systems. George Weissgerber, former senior vice president and one of the geniuses behind Case Remodeling's business strategies for 33 years, begins in this issue a series of articles about estimating, aimed at building an efficient system based on an initial catalog of accurate stick estimates. And Tim Faller examines what's often missing from change orders, driving us towards developing a process that accurately tracks the real costs of mid-project changes.
Of course, this issue also brings you REMODELING's annual Cost vs. Value report, which, is no mere cost catalog but is a data-rich tool remodelers can use to guide the sales process, addressing clients' chief source of anxiety—the cost of a project. The brilliance of the cost-to-value ratio is how it allows you to steer a prospect away from cost and reframe the conversation around a return on investment. This shift in focus will allow you to get on with the real work of remodeling—all the fun stuff found in the craftsmanship and design, building performance and service, and all the stuff that keeps us in the business: satisfied customers and an evergreen source of referrals. Wishing you all many happy returns to this state in 2019.
