Back on solid ground

For those who consider Qualified Remodeler’s Top 500 list a benchmark for the remodeling industry’s performance, it’s safe to say remodeling is back on solid footing. Total gross revenue reported by those on the 2014 Top 500 list is $8.25 billion, which is a jump of roughly 18 percent from the $6.76 billion reported in 2013. That’s a healthy gain, and higher than the 10 to 12 percent growth experts anticipated for 2013. However, in 2012 remodelers on our list predicted their collective 2013 revenue would be $10.4 billion, but fell short at $8.25 billion.


The number of remodeling jobs reported for the 2014 Top 500 list also jumped, but only by roughly 7 percent. Compared to the revenue increase of 18 percent, this means the average price tag of remodeling projects is going up, which is good to see compared last year when price tags dropped.


The growth in both total revenue and number of remodeling jobs seen in this year’s list indicate a healthy overall economy, but also are the result no doubt of the 2014 Top 500 remodelers’ marketing efforts. This year’s listees reported spending an average of 7.4 percent of their revenue on marketing, compared to 7.1 percent in 2012 and 6.9 percent in 2011.


Remodeling firms on the Top 500 list are dedicated to their work and the regions they serve. Firms on this year’s list have been in business for an average of 27 years and at the same location for an average of 24.6 years.


On remodelers’ minds

Numbers can be fun to analyze and discuss, but nothing beats hearing directly from the people who helped generate the numbers. As in years’ past, Qualified Remodeler solicited comments from remodelers on this year’s Top 500 list about the health of the remodeling market, as well as business practices. Following are some of the thoughts shared by remodelers on this year’s Top 500 list:


Q: Now a few years removed from the recession, what permanent damage, if any, did it cause to the remodeling industry?


A: Home values are low meaning less or no equity for customers. Values are not back to the high levels we saw in the mid 2000’s. This means that a large segment of our market does not have the ability to borrow against the equity in their home to make improvements. I think this is going to take a while to correct itself. Andy Wells, Normandy Design Build Remodeling


A: The damage that was caused is the public’s perception that times are tough and that they can remodel or build cheaper now then 6 – 8 years ago. Unfortunately the cost of materials never went down and always continues to rise. Additionally with the shortage of construction labor, as a result of the recession, labor also costs more now. So, unless the remodeler is willing to work for less – everything costs more than the public’s perception. Michael Menn, Michael Menn Limited


A: The one major issue that has been a direct reflection of the recession is the lack of financial funding to the consumer for home improvement projects. The consumer with a high credit score still has the ability to get financing for home improvement projects, but the consumer with a credit score between 600 to 660 is questionable due to the recession. The financial institutes are less likely to extent credit for marginal credit scores now more than ever. Corey Cover, American WeatherTechs


A: I think that the remodeling industry was strengthened by it as it forced all companies to get smart about their business and flushed a lot of guys out of the market. Jim Fitlow, ReBath of Utah


A: The biggest thing that came from the recession was the ability to get financing for our customers. Here at The Acri Company, we were fortunate to offer our customers our own in-house financing for their home improvement projects. That really helped us to get through the recession as well as we did. Prior to the recession there were many different avenues to get customer financing for their projects. Those all went away quickly, and those that didn't go away got extremely tight with their approvals. Today financing options are still not like they were prior to the recession. Mortgage lending via second mortgages is virtually non-existent. There used to be a mortgage broker on every street corner, now there are very few. Those that are left can't do the things they used to be able to do, such as consolidation loans. As for the future, I don't envision anything like it (financing) is ever coming back. So going forward, we all must learn to adapt and make due with the options that are available. Since the recession it has gotten better, however no where near the levels it was prior to. Tim Acri, The Acri Company


Q: What’s your business’ greatest need?


A: Even though we are so much better off than a few years ago, we still don’t have as many qualified leads as we would like; that is almost always the case. Tom Kelly, Neil Kelly


A: We need more qualified and trained carpenters. There are people coming up that have no skills, and other carpenters that are coming over from production new construction that don't understand the inticacies of remodeling within a finished home or how to work in the confined spaces of a city. Ari Fingeroth, Federalist Builders


A: With the a company that is 37 years strong we have had amazing loyalty from our employees, we are starting to see some of them begin to retire/semi-retire. Time that with the uptick in the market and the desire of our clients to have their project done as soon as possible we need people! It has been quite a challenge to find the caliber of employee that our clients expect from us, this has made us realize we have to constantly be looking for great talent, even if we don't think we're in need. Cale Kliethermes,

Kliethermes Homes & Remodeling


A: Our greatest need is finding qualified clients that are looking for our services who value what we deliver and are willing to pay for it. Dolores Davis, CG&S Design Build


Q: What is the remodeling industry’s greatest need?


A: Professionalism! Many home remodeling contractors start off as the little guy with little business knowledge. It can be a steep learning curve when it comes to creating and running a successful and viable remodeling company. Too often inexperienced contractors do not fully understand their true costs and charge to little for their services. What looks like a great deal from the clients perspective can quickly turn into broken promises and a poor experience for both parties. As an industry we have made progress, but we still have to find ways to educate the buying public on how to select a quality contractor and continue to provide contractors with resources for improving their understanding of creating and running a professional remodeling business. Even with all the training and resources available it still boils down to good people doing business with good core values to guide them. Once you have that, the other stuff can easily fall into place with a little hard work. Daniel J Hurst, Hurst Design Build Remodeling


A: The work force in our industry, especially in field personnel, is no different than the rest of the countries; it is aging and there aren't enough young people coming up behind them who have the work ethic and desire to be in this industry. As an industry we need to work together with trade and vocational schools to raise the awareness of young people who are mechanically inclined that they can make a great living in our industry with full benefits including 401k plans. We hire the best person for any opening we have, and while 15 years ago that many times was someone in their early 30's or late 20's, it is not the case in today's labor market. Most of our hires have been in their mid 40's or older. As a second generation operator of our company we have great concern of being able to have really talented people still on our team in 10-15 years who can still perform the difficult tasks in our industry. Josh McDermott, McDermott Remodeling


Q: What’s the remodeling industry’s greatest threat?


A: Lack of planning continues as a problem. Specifically the lack of succession planning for remodeling business owners is going to cause some potentially tumultuous turnover in our remodeling businesses and employees. This will occur over the next 15 years as the Boomer owners and managers retire or face unexpected health threats. Scott Mosby, Mosby Building Arts


A: Our industry’s greatest threat is the over regulation of government. The politicians look to small business to generate some of the greatest job growth but ironically will saddle small business routinely with ever increasing regulation and hidden taxes in the form fees and property rate valuation increases. Government regulation compliance costs of increased staff time and outside CPA’s sometimes are more expensive than the tax itself. Carl W. Smith, Acra Construction


A: Always our ability to police ourselves is limited. Turning around the negative impressions either from shoddy workmanship or unrealistic expectations from the “reality” shows. Tom Reilly, Prescott Architect