Are your customers telling you the whole truth?
Industry trends, predictions, and more!
Each quarter, we send our Market Predictions Survey to members within our community of quality to get a better understanding of the state of the residential construction industry. This report contains a summary of the feedback we received from our 2017 Q2 Market Predictions Survey.
Since we began this survey in 2008, we’ve seen rather significant gains in confidence in both market performance and overall business performance.
In this review, we’ll examine the results indicating how our respondents feel about the current state of the market, how they expect the market and their company performance to change in the upcoming year, what their long and near-term strategies are, and which industry trends they believe are rising and waning.
Current State of the Market
When asked about the current state of the market, participants selected one of the following terms: ‘Excellent,’ ‘Good,’ ‘Fair,’ ‘Poor,’ or ‘Horrible.’
Back in Q4 of 2016, the number of ‘Excellent’ or ‘Good’ responses barely rose from 76.5% in Q3 to 77.1% in Q4. However, this percentage increased dramatically the following quarter (Q1 of 2017) to 83.8%, making it the highest percentage of ‘Good’ or ‘Excellent’ responses we’ve ever received.
In Q2 of 2017, 84.2% of participants said the current state of the market was ‘Good’ or ‘Excellent.’ This is a .4% improvement from Q1 of 2017 and a 3.5% increase from Q2 of 2016. With that said, compared to Q1 of 2017, more respondents also chose ‘Poor’ or ‘Horrible’ to describe the current state of the market in Q2 of 2017 (2% vs. 1%).
Expected Change in the Market
We also asked respondents to share how they thought the market would change (‘Significantly Improve,’ ‘Improve,’ ‘Remain the Same,’ ‘Decline,’ or ‘Significantly Decline’) in Q2 of 2017. After the number of ‘Significantly Improve’ and ‘Improve’ responses fell in Q1 of 2017 to 42% (down 5% from Q1 of 2017), positive sentiments increased in Q2 of 2017 to 47.4% – the highest it’s been since Q1 of 2015 (62.9%).
On the flip side, those who expected the market to ‘Significantly Decline’ or ‘Decline’ in Q2 of 2017 decreased to 2%, compared 3% in Q1 of 2017. The percentage of respondents who indicated that the market would ‘Remain the Same’ increased in Q2 of 2017 to 50%, up from 35% in Q1 of 2017.
Expected Change in Company Performance
Positive sentiments regarding expected change in company performance decreased in Q2 of 2017. The number of respondents who indicated ‘Significantly Improve’ or ‘Improve’ was 79% in Q1 of 2017, down 4% from 83% in Q1 of 2017.
Likewise, the number of respondents who indicated that they expect company performance to ‘Significantly Decline’ or ‘Decline’ in Q2 of 2017 decreased to 0%, down 1% from Q1’s 1%. This is the first time since Q1 of 2015 that the number of ‘Significantly Decline’ or ‘Decline’ responses was zero. Not surprisingly, the number of ‘Remain the Same’ responses increased in Q2 of 2017 to 21%, up from 16% in Q1.
We asked respondents what new or existing trends they saw more of in the industry in Q2 of 2017. Similar to Q1 of 2017, the three most common emerging trends were:
- Higher-quality, more expensive products
- Renovations that are customized/unique to the homeowner
- Outdoor living spaces
Today’s customers rely heavily on Internet research to determine the highest quality products, and they’re willing to pay more for them.
In addition to emerging trends, we also asked respondents which trends they saw less of last quarter. According to their answers, here are the trends they believe are on the way out:
- Flash-trend designs/material
- Large front and/or backyards
- Isolated home theaters
Being trendy is far less important to today’s homeowners. Clients want something that fits their personal style and won’t look outdated a year later. They’re choosing products with potential future buyers in mind.
For the fourth quarter in a row, respondents reported that finding qualified labor is increasingly difficult. Like Q1 of 2017, many are focused on hiring in the near-term, providing better training to new hires, and implementing employee appreciation programs to increase retention.
Labor shortage is a big problem in the residential construction industry. We’ve started researching more thoroughly to determine where and how to find skilled, reliable laborers.
Other near-term strategies include:
- Closely monitoring customer data to evaluate the state of the business
- Strengthening online/digital presence
- Implementing more processes and improving organization
Having a strong online presence is more important than ever. To stay top-of-mind, we’re investing in SEO, we’re improving and updating our website, we’re implementing social media campaigns, and we’re publishing articles to our blog and newsletter.
In Q2 of 2017, many respondents reported improved customer service as a long-term strategy for growing their business.
At the end of the day, your reputation is the only thing that matters when it comes to the success of your business. Treat your customers the way they want to be treated, as well as your employees.
Other long-term strategies included:
- Using third-party services to evaluate the business
- Ongoing employee training
- Strengthening online/digital presence
Below are a few additional comments from our respondents that we thought encompassed their overall struggles and successes of working within the residential construction industry.
Today, just about everyone shops online, so upgrading our website has been a priority marketing effort for us. So far, it’s paid off nicely!
Unfortunately, today’s homeowners aren’t very patient. What they don’t understand is, if you want someone to come into your home and complete excellent, high-quality work, you need to plan for it. It’s so frustrating that we live in a society where homeowners who want to remodel their home, call us and think we’re going to hop in and start the renovation the next week. It’s a process!
Functionality has always been a very important aspect to our clients, but I’ve seen more and more homeowners get more involved in the thought process. When they don’t like the “feel” of something, they suddenly want to change the entire concept.