According to experts at a press conference hosted by the National Association of Home Builders (NAHB) Remodelers during the International Builders' Show in Orlando, Florida this week, home remodelers' average profit margins have increased since 2011, indicating they are running their businesses more efficiently as residential remodeling activity steadily improves.
The newly-released 2017 Remodelers' Cost of Doing Business Study shows that the average gross profit margin for surveyed remodelers increased from 26.8 percent in 2011 to 28.9 percent in 2015. The average net profit margin increased from 3.0 to 5.3 percent during the same period.
"Remodelers were forced to adopt new strategies to survive the downturn, and keeping those business models in place as the market grows has helped improve their margins," said 2016 NAHB Remodelers Chair Tim Shigley, CAPS, CGP, GMB, GMR, a remodeler from Wichita, Kan. "However, with continued market growth, the ongoing labor shortage will threaten their ability to both meet demand and maintain cost-effective business operations."
"Pacific Northwest consumers are tech-savvy and community-minded," said NAHB Remodelers member Joseph Irons, CAPS, CGP, GMR, a remodeler from Shoreline, Wash. "We've reduced costs while growing our business by focusing on social media outreach and community service over traditional advertising."
NAHB predicts that over the new few years remodeling expenditures will continue to grow, but at a more gradual pace.
"Remodeling activity has experienced strong growth over the past three years," said Paul Emrath, NAHB vice president for surveys and housing policy. "Now that spending has largely recovered to its pre-boom levels, we expect the pace of growth to moderate going forward."
The Remodelers' Cost of Doing Business Study assesses the growth, viability and demographics of the remodeling industry. The 2017 study was conducted through an online survey sent out to 5,700 residential remodeling/rehabilitation firms across the country in the spring of 2016.