Last year was a year of disparities for remodelers. A bad year for some was a decent year for others. At the extreme end of the scale, 22 percent who responded to Qualified Remodeler’s annual market forecast reader survey said their revenue was down more than 20 percent in 2011. For others, there was business within reach: Nearly 14 percent said business was up more than 20 percent.
Across the board, nearly 47 percent of remodelers reported revenues up from a range of 1 to more than 20 percent last year. Fifty-three percent reported business was down across the same percentage range. The results for 2010 were nearly identical: 46 percent up and 54 percent down.
For 2012, remodelers are more confident. Nearly two-thirds (64 percent) of those polled expect revenue to be up, while 36 percent anticipate a decrease.
Although the course of the economy is hardly certain, remodelers have always been adaptable, and that’s exactly what many are doing in a tentative market—adapting.
Change or Die
John Schmitz, owner of Blueprint Homes and Remodeling, Des Moines, Iowa, epitomizes such a mind-set. “Change or die” are words he lives by. In 2010, he shifted his focus from residential remodeling and went after commercial jobs, primarily government work. He had one of his best years ever, he says.
Last year, there was a better blend of commercial and residential work, but Schmitz didn’t turn down a recent job dealing with the water-treatment side of a server farm for a major computer software company. “Five years ago, I would have said ‘go find somebody else,’” he says.
“There are still a lot of residential opportunities,” Schmitz says. “People are just dragging their heels; they are not in any rush.” The usual financing, particularly in the form of home equity, has dried up, he notes. Instead, money from inheritances and settlements has paid for several of Schmitz’s recent residential jobs.
Making the shift from residential to commercial is something remodelers can handle, Schmitz thinks, “but you have to be more sophisticated than a guy operating out of a pickup truck. Everyone looks at you with a skeptical eye. They expect you to cross your t’s and dot your i’s. They don’t take your word you have insurance; they want proof,” he says.
There are other obstacles, too. “The pay is slower,” Schmitz adds, “and the big commercial contractors don’t want to admit anyone else to their ballgame.”
Residential remodeling hasn’t vanished but it has changed, and the changes are likely to have a long-term impact. For example, Schmitz doesn’t think people maintain their homes as meticulously as they once did. “Basically, they just ignore it for 20 years, and then, when stuff falls apart, they either buy a new one or are faced with a great deal of rebuilding. I think it will create a big bubble [of remodeling work] at some point, but I just don’t know how far down the road it’s going to be,” he says.
Remodeling whims seem to belong to another time, too. Schmitz remembers when there was always a hot home-improvement fad to fuel business. “It was paneling in the basement, and then it was pre-fab fireplaces. You always had something fueling the fire. Now, there don’t seem to be any trends out there,” he comments.
Schmitz has changed his pricing structure and bid presentation to align with the times; he gives clients control so they don’t feel cornered. He does this by presenting them with choices so they can bring the total cost down by selecting less costly options or alternately choosing upgrades if they wish. Also, bids are detailed, so items, such as the cost of demolition, are detailed and clients don’t feel unjustified profit is concealed in the bid.