I understand why those of you in the trenches every day may stop listening when the size of the remodeling market nationally is discussed. It’s good information to know, but not of much consequence at a local or regional level. Plus, there are so many sources of market-data out there. Some of the numbers seemingly are at odds with one another.

I like any data that might help me better understand the big picture. Harvard’s Remodeling Futures Steering Committee recently released its biennial report, Improving America’s Housing 2023. Amidst all the papers and indices produced by the group, this report is its most authoritative. It quantifies market size and analyzes changes.

The latest report, which was released March 23, did a good job of summarizing both the agony and the ecstasy of the past two years—years that immediately followed the onset of COVID-19. The top-line number for the industry (including non-pro, do-it-yourself activity) was pegged at $567 billion for 2022. Again, I follow these numbers closely. The volume of activity was astonishing to me. In real terms the market had grown at a 7 percent annualized rate from 2019 through last year, up from $404 billion.

I asked the researchers if they could estimate the portion of the increase that could be attributed to higher costs for labor and materials—inflation. Their answer, in my view, was as consequential as the overall size of the market. Half of the gain in the growth of remodeling over the past two years could be attributed to inflation, they said. Jaw-dropping.

Homeowners and rental unit owners were flush enough with cash and other assets to absorb the tens of billions in costs on their repairs and improvements. Though we hear demand is softening, it’s remarkable that it has not fallen off the proverbial cliff under such price pressure.

I also thought the report did well in identifying each of the relevant market forces over that past two years and, as best as could be expected, quantified the individual impacts. I recommend that everyone read it and ascertain the degree to which each of those forces—changing demographics, house price and equity increases, labor costs, supply chain costs, etc.—are impacting your local and regional market area.

Here’s something that most economists agree on: It is rare for prices of things to go down. Deflation happens, but rarely. These higher prices for labor and materials are here to stay. One sure way to combat inflation is to be more productive as an organization. Efficient and effective companies will be profitable in the future. New business technologies are emerging every day. They hold the opportunity for productivity gains.

Picking the right software or technology solution for your company is not easy; but if you pick the right solutions, and you deploy them correctly, your team will undoubtedly get more done (and possibly with greater customer satisfaction) than before. I am biased on this, but I recommend attending FAST Remodeler Live in Baltimore May 16-17.

For owners and managers of efficient companies, it offers insights on business technology issues as well as connections to vendors who might help shorten your path to greater productivity and profit. Read the latest Harvard report and attend FAST Remodeler Live. QR

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