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Sluggish housing market could add up to less remodeling business in 2020

Jim Buchta, Star Tribune (Minneapolis) on

Published in Business News

"There's more work out there to do than you can imagine," he said. "It's a great business to be in, but people get upset that they have to wait."

Sitek and other remodeling companies say their biggest challenge now is finding skilled workers and subcontractors. While many firms have a small pool of carpenters, most rely on shrinking pools of subcontractors.

"Our contractors are constantly telling me they have to turn away jobs because they don't have the labor to do the jobs," said Beatrice Owen, executive director of the Minnesota chapter of the National Association of the Remodeling Industry (NARI). "There just aren't enough employees."

Harvard's Leading Indicator of Remodeling Activity (LIRA) says annual gains in homeowner expenditures for improvements and repairs across the nation are expected to shrink to just 0.4% by the second quarter of 2020. That's compared with 6.3% now.

New data also show remodeling spending during recent years wasn't nearly as robust as expected, so the Joint Center recently cut by more than half its projections for annual growth in remodeling spending in 2016 and 2017, now estimated at 5.4%.

 

"Declining home sales and homebuilding activity coupled with slower gains in permitting for improvement projects will put the brakes on remodeling growth over the coming year," Chris Herbert, managing director of the Joint Center for Housing Studies, said in a statement. "However, if falling mortgage-interest rates continue to incentivize home sales, refinancing and ultimately remodeling activity, the slowdown may soften some."

(c)2019 Star Tribune (Minneapolis)

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