Remodeling in the US Industry Market Research Report Now Available from IBISWorld

Share Article

Though the recession and bursting of the housing bubble caused revenue to plummet over the five years to 2012, the industry is on the mend. As unemployment falls and house prices stabilize, demand for remodeling services will rise as homeowners will have the necessary capital to fund remodeling projects. Furthermore, higher homeownership rates and tax credits for homeowners who increase energy efficiency will support revenue growth over the next five years. For these reasons, industry research firm IBISWorld has added a report on the Remodeling industry to its growing industry report collection.

IBISWorld Market Research

IBISWorld Market Research

Higher homeownership rates and tax credits for energy efficiency will revive demand

The Remodeling industry's revenue foundation shook as the housing bubble burst, as consumers decreased spending on home improvements. Including do-it-yourself (DIY) projects, spending on home improvements is expected to fall at an estimated annualized rate of 1.5% over the five years to 2012, totaling $146.4 billion. According to IBISWorld industry analyst Olivia Tang, sharp increases in unemployment during the recession led to lower homeownership rates and less disposable income, causing homeowners to delay professional remodeling and turn to DIY projects, hurting industry demand. However, since 2011, firms have benefitted from increased consumer disposable income. As a result of low mortgage rates, the percent of homeowners is expected to grow for the first time since 2007 to 66.7% in 2012. In addition, stabilizing home prices support homeowners' ability to finance remodeling projects. Despite revenue growth of 17.9% in 2012, it will remain well below pre-bubble levels; revenue is expected to fall at an annualized rate of 10.5% over the five years since 2007, bringing the industry total to $41.3 billion.

Falling demand required firms to intensify price competition to attract new projects, causing profit to contract from 21.0% of revenue in 2007 to 17.5% in 2012. Smaller firms especially suffered from poor conditions because their services are more easily substituted by DIY projects. This decreased revenue for smaller firms caused a higher rate of industry exits. Consequently, the number of enterprises is expected to fall 11.6% per year over five-year period to 2012. Firms also hired fewer subcontractors to curb costs, reducing the number of workers at an annualized rate of about 9.8% during the same period. During the five years to 2017, industry recovery will be driven by improvements in employment and, therefore, per capita disposable income. “Housing prices are expected to increase, allowing demand for industry services to rise because homeowners often leverage the value of their home through loans to fund remodeling projects,” says Tang. In addition, despite projected increases in mortgage rates, they will remain below historic levels. As a result, the percent of homeowners will increase in 2017, expanding the amount of potential clients. Furthermore, tax credits to homeowners for energy-efficient remodels will likely be a source of industry growth over the next five years. Consequently, revenue is projected to climb during the next five years.

The Remodeling industry has a particularly low level of concentration. The top four largest firms account for less than 5.0% of industry revenue in 2012. Only about 0.1% of firms employ greater than 100 workers. Conversely, the majority of industry operators are smaller firms that specialize in specific regions or industries. In fact, about 84.0% of enterprises contain fewer than five employees. Non-employers' account for about 43.0% of this total demonstrating the highly fragmented nature of the industry. For more information, visit IBISWorld’s Remodeling in the US industry report page.

Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189

IBISWorld industry Report Key Topics

This industry is primarily engaged in remodeling construction for residential buildings. Remodeling construction includes additions, alterations, reconstruction, maintenance and repair work. This industry is composed of general contractors, operative remodelers, remodeling design-build firms and remodeling project construction management firms. This industry does not include commercial remodeling.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Gavin Smith
Visit website