At the 2019 Remodeler's Summit in Orlando, Fla., Mark Boud, chief economist for Metrostudy, painted a clear picture of the economics underlying our industry. In certain respects, it is a rosy picture for remodelers. The new-home market is largely overpriced but undersupplied, which encourages buyers to either buy existing homes (which drives up remodeling activity) or stay in place and remodel rather than move up to a new home. But while there is a price bubble in new homes, it is not a supply bubble (due to the undersupply), so we are unlikely to see a collapse of the housing market like we did in 2008. On that point, we can relax a little.

Will the trend towards remodeling last? Not at the same pace we have seen in recent years. Boud predicts a "mild to moderate" price correction near the end of this year and into the next, which will bring new- and existing-home prices closer. But the near term will also be affected by the tariffs imposed in the current trade war, which are driving up remodeling prices. The ripples from the trade war are also affecting a number of other industries, creating an overall sense of uncertainty and undermining consumer confidence.

But while the rate of growth is slowing (and possibly about to stall), there is still plenty of work out there, and it is still possible to grow your business. Doing so in this climate will depend in large measure on where remodelers focus their attention and on defining the "who" of remodeling. Boud filled in the rosy remodeling picture with some important insight. Right now and into the near future, remodeling demand is strongest among three important consumer groups:

  • Families account for 9% of all U.S. households, and 97% own homes. They are ranked No. 1 in household size, number of shoppers, and children and have nearly the highest average household incomes. Their needs for remodeling services are high but often unrecognized.
  • Elites are affluent families and older couples that account for 9% of U.S. households. They have the highest incomes, the most education, and a high rate of homeownership (91%) in high-value homes.
  • Active adult elites make up about 6% of households and have a very high rate of homeownership (98%), but their home values vary ($100K to $750K). They rank No. 1 in grandchildren, conservative politics, and new cars.

There are other consumer groups, but these three are the markets where the biggest bang lies. Curiously, millennials are reportedly buying older houses, which shows promise, but they tend to opt to fix them up themselves. Perhaps down the road, they will generate activity by hiring professionals to fix their mistakes.