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A lack of affordability has prevented many Americans from re-entering the housing market, leading to a surge in the home renovation market.
In fact, data from Buildfax states that within the past five years, home remodeling has surged about 30%.
However, in its 2019 home renovation forecast, Houzz explains that although the remodeling industry is likely to have another successful year, many experts are proceeding with caution.
“Residential construction and design service professionals large and small have sustained a remarkable multi-year run with upper-single to double-digit revenue growth,” Houzz principal economist Nino Sitchinava said. “Based on qualitative feedback, the recent deceleration in growth of construction services is likely a function of capacity constraints due to labor shortage, rather than a contracting demand.”
That being said, Sitchinava notes that remodelers’ mood about the economy is quickly changing and clouding their business outlook.
According to Houzz’s analysis, although companies maintain a positive perspective on the demand for their services in 2019, wavering confidence in the national economy is dampening their outlook.
“While companies maintain widespread optimism about the demand for their services in 2019, sentiments about national and local economic health in 2019 are neutral at best,” Houzz writes. “Unlike last year’s expectations, industry groups are more consistent in their views that the national economy is much more likely to deteriorate in 2019 than improve.”
According to Houzz, the amount of residential renovation and design companies that cite a positive outlook for 2019 came in at 58% to 80%, falling from last year’s rate of 71% to 88%.
And even though six of the seven industry groups expect profits to increase in 2019 by 63% to 70%, they are more likely to expect the national economy to deteriorate over the coming year (by 35% to 61%) than improve.
NOTE: Houzz’s Renovation Forecast is based on data reported by nearly 4,800 professionals in its community. The study was conducted from Dec.10, 2018, to Jan. 10, 2019.