The North American siding industry reached 58 million squares valued at $4.7 billion in 2011 and included a wide range of materials (see Figure 1). Vinyl is the most widely used material, especially in the repair and remodeling sector, followed by brick, fiber cement and stucco. Brick is used extensively in new construction and is strongest in the Southeast and Southwest, whereas stucco, also used in new construction, is widely used in the West and Southeast.
Before the housing crisis of 2007, new construction accounted for more than half of the siding volume (see Figure 2), and the mix of products was heavily dependent on regional build rates. However, since the dramatic decline in new construction, the repair and remodeling sector accounts for nearly three-quarters of total volume. As the home-building market rebounds, the repair and remodeling sector will drop to around two-thirds of the total volume but will still account for the majority of demand for the foreseeable future.
Because the tightness of credit impacts consumer spending and re-siding can represent a substantial expense—typically $2,000 to $10,000 depending on the size of the job and materials chosen—consumers are looking for a better value. Products with long life expectancy, better warranties and low maintenance gain favor. At the same time, the competition between products for tight demand has resulted in downward pricing pressure and reduced margins in several categories.
Looking forward, the siding market is likely to undergo some dramatic changes based on the new 2012 International Energy Conservation Code, which will require exterior rigid foam insulation or another wall insulation strategy in colder climate zones. There will be an effort to reduce thermal bridging in exterior walls. Most likely, new installation methods, including foam and special fasteners will be required, and contractors will need additional training.
Home improvements focused on energy efficiency and moisture infiltration will improve comfort and reduce monthly costs. Consumers will more likely be looking at remodeling for its ROI potential, which represents new opportunities for remodelers.
Ken Jacobson is partner at Philadelphia-based Principia, a marketing consulting firm focused on building materials and chemicals.