Is There Life in Remodeling and Replacement?

John G. Swanson
May 3, 2011
THE TALK... | Markets & Trends

Sure, there were concerns about a tax credit hangover in the replacement and remodeling market as the year began, but most industry folks I talked to were talking positively about 2011. It might not be a gangbuster year, but I got the sense that most window and door manufacturers and dealers in this segment were looking for growth.

Unfortunately, we've been getting mixed signals of late. On the positive side, NAHB's Remodeling Market Index is at its highest level in four years. BuildFax, which recently launched its own index of remodeling activity, said February 2011 was 20 percent stronger than February 2010. It was also the 20th straight month of improving numbers.

Harvard's Joint Center for Housing Studies pulled back on its projections for growth in remodeling spending, however. "Given all the economic uncertainty that we’re seeing nationally, the home improvement recovery is expected to be rocky," said Eric S. Belsky, managing director, in the center's latest release.  Hanley Wood also joined in recently with a less than rosy report that remodeling activity declined for the first quarter of 2011.

So what are you expecting now?  Will replacement and remodeling sales grow at your company in 2011?  That's our poll question of the week.  And, of course, I'd like to hear from you. What's the recent upsurge in gas prices going to do? What about the seemingly endless stalemate on dealing with the federal deficit?  Will the end of Osama bin Laden provide a jolt of optimism?  Post your comments below or email me and share your thoughts.

 

Survey Results as of 05/10/2011:

 

How will your company's 2011 replacement /remodeling sales compare with those in 2010?

Up between 5% and 15%

  

 

30%

Down, more than 5%

  

 

29%

Up more than 15%

  

 

27%

Down, but less than 5%

  

 

14%

The good news is that more respondents say their remodeling and replacement sales will be greater in 2011 than they were last year.  The bad news is that our nation is in an economic recovery.  While things are supposedly getting better, the fact that more than 40 percent of respondents are predicting decreased sales from the R/R market is not very encouraging.

Slow job growth. Depressed home values. The lack of financing. Reduced tax credits. Our readers outline a number of other challenges facing window and door companies these days.  There are good reasons for a pessimistic outlook.

Pessimism doesn't help, however. Bob Maynes at Mathews Brothers strikes a better note. Markets will improve, but all the indicators say there will still be bumps along the way.  We have to remain cautious.

 

 

 

Comments

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 I think you have to look at the 1974 fight between Ali and Forman.  The anology is that Forman is the economy and Ali the individual, company and/or organization recieving the blows dished out by a unyieldly force. The economy has thrown massive body blows to everything in its path.  The strong, and the ones with vision have taken the blows and are waiting for the time to emerge and float like a butter fly and sting like a bee.  Good times will be back and when they come, those that have stayed the course will grow and prosper.  Energy price increases are a body blow, but, for those so inclined to look ahead--they paint a picture of sucess for those that have vision.   

No one has mentioned the volume of price increases coming in from all component suppliers, from aluminum to vinyl to castings to glass trucking costs to any plastic based product, i.e. weatherstripping and injection parts and the inevitable, cardboard.  Let's kill the upswing! Low value energy credit! No incentive unlike the last 2 years. Biz is slow in growth and margins are slim. So, increases to contractors are coming.  They're not happy.  Homeowners want to pay the least and get the most. Everyone's margins are slim.  Say all you want about high performance and green and how advanced the industry is but here in the trenches, life is tough. Low price is the leader!

While 2011 got off to an even slower start than 2010, we’re finally seeing several back-to-back weeks of strong order placement. Interestingly enough, sales of our higher end products (the Mikron Wood and the Energy Core based windows) are much stronger than we had expected. The uptick seems to be in all arenas–residential and commercial, new construction and retrofit.

That being said, I think it’s way too early to breathe a sigh of relief. The ripple effect of $4.00 a gallon gas and $5.00 a gallon fuel spreads far and wide. Component suppliers are passing along their increased fuel costs, either in the way of surcharges or price increases, which means that we have to either absorb those increases or pass them along, along with our own increased delivery expenses. Hopefully, we’ll see a bounce down in fuel costs like we normally do in the spring, which will do WAY more to bring back buying confidence than the short lived euphoria of the death of OBL.