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Now is a good time to remember how quickly the remodeling market grew these past few years. When you subtract inflation, it grew at a compounded annual growth rate of 7 percent between 2020 and 2022.

That is what Harvard’s Abbe Will told Qualified Remodeler last summer when Harvard’s Joint Center for Housing Studies published a biennial report pegging annual home improvement and repair spending at $567 billion.

Two years prior, at the end of 2019, that same number from Harvard was $404 billion. Call me crazy, but when a market grows by $163 billion in two years and does not subsequently contract very much, then there’s still plenty of business in 2024 for remodelers and home improvement pros to go out and capture.

That’s not saying this is an uncomplicated market. For example, Will also told QR last summer that half of the massive $163 billion, two-year market growth could be attributed to inflation.

And because inflation only goes one direction—up—higher prices for everything from deck boards to cabinets remain a stubborn and persistent cost of doing business.

Labor has also been a major factor. In May at the Peak Profit Summit in Houston hosted by Dave Yoho Associates, I conducted a very informal poll of a dozen home improvement company owners about staff salaries. All said they’d been very generous with cost-of-living increases over the prior 18 months.

One leading pro said he gave his entire call-center team a 10 percent raise to preempt any departures. This is a big company, so total call-center salaries that were once $2 million instantly rose by $200,000 just to keep the team in place.

This was likely a very shrewd move. Call-center people are so critically important these days. Every inquiry, whether from online sources or elsewhere, must be handled with kid gloves.

Costs for leads are rising, and fully loaded costs (including expenses like call-center staff) are pushing new highs. At the same conference in May, another very large company owner said his company’s fully loaded costs per bona fide lead are currently $850. Again, these are complicated times.

But that does not mean there’s no business to be had. The stock market has hit new highs. Baby boomers are sitting on piles of cash and even larger sums of home equity.

Every possible measure of consumer demand remains strong despite steadily rising pricing for all types of home improvements. Very well-heeled clients are paying the inflated project costs in order to get what they want. At the same time there’s evidence that others are capping their home improvement spend and scaling back on scopes of work.

This summer remodelers and home improvement pros are out there making hay, particularly experienced pros. They aren’t relying on online leads. They are retraining their staffs on how to develop face-to-face leads through canvassing, home shows and radius marketing.

It’s a good market out there. But coming off the growth we experienced, it does not feel that way. QR

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