Home Renovations Were Hot in 2021; Industry Shows No Sign of Slowing Down in 2022
By Patrick Fingles
If you were looking to renovate your home this past year, you’re fully aware of the challenges that the pandemic presented. Supply chain issues delayed projects and elevated the cost of building materials, not to mention increased demand for home renovations and pushed many timelines back by weeks or months. As the new year begins, many homeowners are wondering whether these headaches will continue into 2022. While the actual outcome is not certain, there are plenty of indicators that point to what’s in store for the home renovation industry. Here’s a preview of what you can expect.
Market perception will continue to impact consumer purchases – which should keep contractors busy.
While a majority of Americans are reported to have investments in stocks or retirement accounts, a relatively small share of American families (14% in 2020) are invested in individual stocks. But when the market is flowing, it sets an overarching tone that can reverberate into consumer spending. In a bear market (versus a bull market), a person’s salary may not change. But if they’re inundated with news of people losing their money, the organic response is to tighten up purse strings, even if they’re not participating in the loss or the gain.
With that in mind, the market for 2022 appears to be stable enough for the median homeowner to invest in larger home remodeling projects. The government is pumping money into the economy through monthly tax credits, and an anticipated capital gains hike being much lower than initially predicted has also helped. All this points to strong consumer spending for the year ahead on higher-investment projects like home remodeling.
Homeowner lending trends point to continued demand for home services contractors.
Homeowners have always used different means to finance projects, whether through home equity lines or credit cards. But recently, we’ve seen an increase in home improvement lenders entering the landscape. Two very large companies that focus on homeowner lending recently sold to Truist and Goldman Sachs, respectively, suggesting an increased value in that lending area. Additionally, an increased number of contractors are offering financing options directly to their consumers, reducing the barriers for accelerating home improvements.
Supply chain woes will extend wait times for home renovation projects.
There’s no question that supply chain restrictions tend to have a direct influence on consumer behavior; when you hear there’s a lack of something available, there’s a natural reaction to say, “I should do this while I still can.” In this sense, increased consumer demand is working in favor of sales teams for home contracting services. However, these same supply issues will continue to extend delays for lumber and other essential building materials for the contractors performing those renovations.
What expectations should you set for your contractor in 2022?
Barring an unexpected market collapse, these factors seem indicative of continued high demand for home renovation services in the year ahead. If you’re among the many homeowners looking to start a renovation project, keep these two expectations top of mind as you begin requesting estimates.
1. Demand transparency from your contractor. Contractors are notorious for overpromising and underdelivering – and with supply chain issues likely to continue into the new year, if an estimate feels too good to be true, it probably is. Homeowners should seek out contractors who will be honest and transparent at the estimating stage on how supply issues may impact their ability to get the right materials for a given job – or if delays from jobs they’re completing before yours may push your timeline back even further.
It’s important to request honesty and transparency on the types of materials your contractor will use for your project. Most contractors reserve the right to switch building materials if there are delays, which becomes even more relevant when supply chain woes threaten availability. For example, if you wanted a specific brand of sink faucet for your kitchen remodel but it’s not available for months, your contractor may try to swap in a comparable unit of reduced quality to stay within the timeline. Contractors using a point-of-sale or inventory management system should be able to provide informed assurances on when materials for your project will be available and how supply could impact timelines and pricing.
2. Ditch the “pen-and-paper” contractor for a fully digital experience. It’s easiest to understand the finer details of your home renovation project through a digital estimate. A digital contractor experience allows you to see line-by-line what is contributing to the cost of an estimate, see real-time pricing changes based on the materials you select for your project, and anticipate delays from labor or material shortages.
Beyond these assurances, modern home contracting sales software allows the entire sales process to be managed digitally. From making digital payments to tracking the progress of a project, consumers benefit from a digital customer experience. For years, you’ve been able to manage Amazon purchases and track package deliveries from your phone. Nowadays, the right contractor can provide that level of transparency, as well.
Patrick Fingles is the CEO of Leap – a subscription-based software helping home improvement contractors reduce error, increase efficiency and digitize their business. With nearly two decades of leadership in the home improvement industry, Patrick has dedicated his career to redefining the expectations of what’s possible from contractors. Learn more at leaptodigital.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.