All Signs Point to a Home Renovation Boom in 2023
If you’ve been watching economic news lately, you’ve probably seen a lot of doom and gloom. If we’re not talking about inflation, we’re talking about recessions, OPEC oil production increases, and all kinds of other bad news.
So, it’s fantastic to finally find a bright spot in the economic outlook for home renovation companies.
Thanks, in part, to all that volatility in the markets, more people are choosing to stay in their homes. Instead of selling and buying something new, they’re spending more on renovations, additions, and improvements. Here’s what you need to know.
How Much of An Increase Are We Talking about?
The well-known website, Houzz, conducted a home renovation study earlier this year. During the study, they interviewed 4,000 homeowners. Not only had only 1% changed their home renovation and remodeling plans in 2022but 37% had also completed a home improvement project, and 23% said they were planning one for 2023.
Why Are People Choosing to Renovate Rather Than Move?
The simple truth is that when there’s so much volatility in the markets, most people do choose to hunker down, ride it out, and hope things get better over time.
It’s true for financial investments, it tends to keep people in their jobs, even when they don’t love them, and it certainly applies to property ownership. Not only is the threat of a recession forcing many people to tighten their belts, but there are also several well-known property bubbles in North America. Everyone is scared that they will make a new property purchase just before a price correction, and they’ll lose all the equity and appreciation they built up over the years.
There are also personal reasons why homeowners choose to stay and renovate rather than moving. First and foremost, moving is never an enjoyable experience. Even a move that you’re excited about is one of the most stressful life events you can have.
Then there are school zones, friends and neighbors that you don’t want to leave, and sentimental attachment to your home. After any homeowner has spent a few happy years making memories in a home, they’re much more likely to want to stay. Finally, many families are choosing to live in multi-generational households, which have many personal and financial benefits for everyone involved.
So, What Are People Spending Their Renovation Budgets On?
More people choosing to spend on additions, renovations, and upgrades to their current homes is great news for any construction businesses that offer these kinds of services. However, by finding out what people are more likely to spend their money on when doing a renovation, you can further position your business to capitalize on this.
Kitchens and Bathrooms
It’s no big surprise, but kitchens and bathrooms topped the list of most wanted renovation projects in the Houzz study, with 33 and 37% respectively.
Kitchens and bathrooms not only sell houses, but they also make living in the house you’re already in a more pleasant and user-friendly experience. So, if you don’t already offer services related to kitchen and bathroom remodeling, it might be time to consider what kind of services you could offer for this type of renovation project.
Living and Outdoor Areas
The next big item on most people’s renovation wish lists is their living areas. This includes opening living and dining areas to create an open concept space and creating better flow between indoor and outdoor living areas.
Custom outdoor entertainment spaces including pools, outdoor kitchens, patios, and other leisure spaces are also very high on everyone’s renovation to-do list. People want large, comfortable, great-looking spaces to host family and friends.
While cosmetic upgrades and floor plan changes are the kind of renovations many people get excited about, a large percentage are actually spending their renovation budgets upgrading home systems like security, electrical, plumbing, and HVAC. In fact, between 34 and 49% of people who told Houzz they either were currently or had previously renovated their homes in the past year did this kind of work.
Finally, when people choose to stay in their homes rather than moving to a larger home, they very often spend their renovation budget on extra floor space.
Whether this is finishing a basement so that it can be a workout or recreation space or adding bedrooms for kids or guests, additions are always in high demand.
Companies that specialize in converting underused spaces like attics and coach houses will also find their services in high demand, as will those who build in law or income suites.
Not Without Challenges
When Houzz interviewed homeowners about their renovation experiences and plans, they also mentioned some of their concerns, and what might prevent them from completing their renovation plans. These include:
· 37% were worried about supply chain problems
· 35% weren’t sure that they could find the right professionals and tradespeople for their project
· 27% were concerned that they could not keep their project on budget
· 54% were concerned about the effects of inflation on their renovation plans
Positioning Yourself to Take Advantage of the Boom
Knowing that a renovation boom is coming is a great start but ensuring that you can take advantage of that boom is essential. If you have an established business, next year could allow you to expand your customer base and grow your revenues. If you have a newer business, this could be the year that sets you up for the future.
Let’s look at some of the things you need to do now to take advantage of the surge in demand.
Hire and Train
If you’re planning to use the renovation demand boom in 2023 to grow your construction business, then you will need to have the capacity to complete all the projects you will have access.
There is currently an employment crunch, particularly in construction and trades. So if you haven’t already been looking to hire and retain great people, now is a good time to start.
Negotiate Better Deals
Inflation is a looming threat for everyone, and renovation and construction companies are no different.
Instead of waiting for crippling price increases to happen to you, be proactive and renegotiate deals and discounts with your suppliers. If your current vendors can’t or won’t improve your pricing, consider finding alternative suppliers who will.
If you want your company to be ready to take full advantage of the renovation boom expected in 2023, now is a great time to increase productivity, on and off-site.
Invest in tools and labor-saving equipment. Upgrade your construction estimating software so you can get quotes to your clients faster. If you’re not already using a cloud-based accounting system that you can access anywhere, consider making the switch.
Doing everything in your business faster and more efficiently not only allows you to get more work done, but it will also make all the work you do more profitable.
Invest in Marketing
Many construction businesses don’t believe in marketing and advertising. They’re happy to depend on word of mouth and industry referrals.
However, if you want to grow your construction or renovation company beyond a one-man operation, that’s usually not an effective strategy.
Investing in a website, creating interesting and useful content for people who are searching for information in your area, learning social media, and growing your reach will all fuel business growth for your company.
Focus Your Skills
Many construction and renovation companies start out as generalists, but usually, as they grow and evolve, they specialize in a particular type of work. Perhaps you are a kitchen master, or maybe you’re the basement wizard.
Focusing on a specialized type of renovation and remodeling not only allows you to market your services better, but also allows you to streamline your business. You can work with suppliers and manufacturers that are specific to your niche, there are fewer building codes and regulations you need to stay on top of, and you can build a great reputation.
CostCertified Can Help
At CostCertified, we’re very excited about the renovation boom we’re seeing now, and that is expected to continue at least through next year.
We’ve been working with construction companies, renovation businesses, and other home improvement specialists for a while now, and we’re always excited to help them grow and manage their businesses better.
Our one-of-a-kind construction estimating program for home builders, renovators, and specialist trades is more than just another estimating system. It allows our users to create customizable, accurate, and detailed proposals in minutes and has all kinds of clever built-in features to make the estimating, sales, and contract management process easier. It even exports your quotes to QuickBooks when you’re ready to send a final bill!
Having been in the industry as long as we have, we’ve been through busy construction seasons too, and we know that once it gets started, there will be very little time to think, let alone improve your business systems and processes.
The holidays are just around the corner, and we’re expecting to see a sharp increase in renovations shortly after they’re done. So the best time to get ready for all that extra business is right now.
Contact our team to find out more about how the CostCertified platform works, and how we can help you to customize it for your business. It’s going to be a great year for construction, and we’d love to be part of your team.