Home Improvement company owners are getting a lot of mixed economic signals from the media lately. Many outlets are reporting strong optimism (Builders ‘Cautiously Optimistic’ Despite Slow Growth) as well as signs of continued growth for the next few years (Survey Says: Larger Remodeling Projects Trending Up, Harvard Study Shows Robust Remodeling Growth Ahead).
But there is also cause for concern as to whether this fairly strong economy can continue to grow. The April Jobs Report showed fewer people were being employed than expected and that there were revisions down on the actual jobs added in February and March (down by nearly 20,000.)
So what does it all mean? Based on reports from NAHB, NARI, JCHS and a few others, it seems as though growth is expected but at a modest rate. They’re basing this on current remodeling expenditures and sales of materials as well as the outlook from those in the industry. Home prices are going up because supply of existing homes for sale is going down. Low oil prices, which has recently shaken the financial industry, could be to blame for some of the slow growth in the home improvement industry in Q1. So confidence is still high for the rest of this year and into 2017 partly because oil prices are on the rise again.
However, there is cause for concern that many of these housing studies may not be taking into account. Slower job growth is not the only indicator that the economy is not as strong as many believe it is. Wage growth has been very stagnant. In April, average hourly wages were only up by 0.3%. Many employers are saying that it is hard to fill positions which should mean there’d be some wage increases. But they’re holding around 2% to 2.5% for several years now.
The other concern is corporate earnings. According to the Wall Street Journal, earnings are expected to be down for the 3rd straight quarter. This creates massive uncertainty in both corporations (which might slow hiring and further depress already slow wage growth) as well as homeowners considering new purchases (fear of losing their job, mounting debt, stagnant wages, etc.)
Many see a rosy future for home improvement because a lot of projects are being sold and the pipeline is full for the foreseeable future. But to prevent the bottom from falling out of that sales pipeline, it is advisable to continue to market to potential customers now, rather than wait until later when it might be too late.
Keep generating quality leads now, and if you fail to close a deal… don’t discard that homeowner as a lead. Use periodic e-mails, newsletters, and phone calls to keep them in the mix as possible future clients.
Our customers utilize our built-in closed loop marketing features to continually reach out to leads who did not purchase. This allows them to keep their pipeline full and sales coming in, even if the economy takes a turn for the worst in the next few business quarters.
Keep an eye on the remodeling industry news for true economic indicators and not just hopeful projections. According to the NKBA, remodeling expenditures were down 1.6%, single family starts were down 9.2%, and existing home sales were down 2.6% in the month of March. Numbers can tell the true story amid all the cautious optimism.