To be sure, these are good times for growth-minded remodelers and home improvement entrepreneurs. Whether you specialize in whole-house renovations or you are busy capturing your local market for replacement windows, demand is strong everywhere and in all segments. Proof is also everywhere.
The second quarter update of the Leading Indicator of Remodeling Activity (LIRA) points to an 8.6 percent annual rate at the present time. Similarly, John Burns Real Estate Consulting’s current forecast for the overall economy is at its highest level in nine years. The firm predicts remodeling will grow by 5 percent in 2021, driven by an anticipated 11 percent surge in big-project activity. And there is plenty of proof in the details of this annual ranking of the industry’s largest firms.
Added together, the total remodeling revenue for the 2021 TOP 500 is $13.3 billion, up from 2020 when the tally was $10.6 billion. Jobs are up as well. They hit 1.2 million, up from 1.07 million the year prior. The primary reasons for this surge, which sprang from the tumult of the COVID-19 shutdown, are well-known.
Homeowners saved large amounts of money by not traveling or eating out. They used those funds to improve their homes. Lastly, the government pumped out $6 trillion to support businesses, the unemployed and particularly hard-hit industries in transportation and hospitality. The John Burns team estimates these funds translated to approximately $39,000 to all 129 million households across the country.
For remodelers, the government infusion was a double positive. Homeowners had additional funds to spend on improvements, and their businesses were allowed to tap millions in forgivable loans.
Though not recorded as income that would otherwise show up in the revenue totals for these year-over-year rankings, Paycheck Protection Program (PPP) funds were an important dose of liquidity at a time when huge uncertainties about how to safely conduct business with the public triggered investments in N95 masks and other jobsite protective equipment.
Data from the Treasury Department relating to the first round of PPP funds showed that more than 3,000 remodeling and home improvement firms received more than $150,000 through the program.
Pain and Gain Not Shared Equally
Though today all five primary industry segments are experiencing strong demand in all 50 states, not all fared equally during the pandemic year.
If your company catered to an upscale clientele in Manhattan, your jobsites were shut down for several months. Big losses were unavoidable. Away from big cities where contractors were less likely to be locked out of condominium buildings, design-build and full-service remodelers also suffered big losses for long parts of the shutdown.
For safety reasons, many homeowners halted big projects in process. They also deferred and canceled many projects. Look closely at the 2021 TOP 500 list, and you will notice a decrease in the number of big-project companies. They simply did not want to report their numbers after such significant losses.
Insurance restoration and specialty home improvement firms felt very little pain. There was disruption and fear during the second half of March and most of April 2020. By May, the disruptions gave way to a full-scale wave of new business that has yet to subside.
Amid unabated demand, large firms are facing big, complex challenges that have become increasingly pronounced. Skilled labor is incredibly scarce. For some building products, supply chain delays have led to unwieldy backlogs and longer project timelines.
Then there is a big wave of outside investment. Companies like WestShore, Titan Home Improvement and Leaf Home are gobbling up other firms. The TOP 500 is booming but also disrupted and changed. QR