Are your customers telling you the whole truth?
Industry trends, predictions, and more!
Since 2008, we’ve sent our Market Predictions Survey to our GuildQuality members (and now, our Best Pick Reports and Five Star Rated members, too!) to get a better understanding of the state of the residential construction industry. This report contains a summary of the feedback we received regarding Q4 2020.
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 2020, what their long and near-term strategies are, which industry trends they believe are rising and waning, and finally, how they feel about qualified labor this quarter.
Current State of the Market
Overall, feelings about Q4 2020 mirrored Q3 2020 quite closely. The percentage of members reporting feeling Good or Excellent about today’s market only dropped 1% in Q4 2020 – 78% vs. 79%. This number is vastly higher than Q2’s 58%, which indicates that despite the ongoing pandemic, as well as the 2020 election, businesses are still feeling both hopeful and stable.
On the flip side, the percent of Poor and Horrible responses decreased, even more, this quarter to just below 3% (vs. 3.6 in Q3). The percent of Fair responses increased slightly to 19.1%, up 2% from Q3 2020.
Overall, these results indicate that the pandemic has not had a lasting negative impact on this industry.
Expected Change in the Market
We also asked respondents to share how they expected the market would change over the quarter. As a reminder, at the start of the pandemic in 2020, nearly 70% of our members felt that change was inevitable. Nearly 51% of respondents predicted the market would Improve or Significantly Improve, and 18 % indicated the market would Decline or Significantly Decline. Only 30% of respondents predicted no change — that number hasn’t been that low since Q1 2013.
Similar to Q3, this quarter, members are predicting less change. In fact, 48% believe the market will stay the same. For those who do see change ahead, they’re torn as to which way. 30% of respondents predicted the market would improve in some way (compared to 35% in Q3), and 20% believe we’ll experience a negative change.
Expected Change in Company Performance
When it comes to company performance, the overall outlook seems to be leveling out some compared to Q2 and Q3 2020. Although it is still on the low end (only 50% of members responded with Improve or Significantly Improve), negative responses have declined a bit.
This quarter, 7% of respondents believe their company performance will Decline or Significantly Decline, which is 1% lower than last quarter and 4% lower than Q2 2020. Although 7% may seem high compared to our pre-pandemic numbers, looking back at Q4 2018, negative predictions accounted for nearly 10% of all responses!
These numbers, along with the 41% of “Remain the Same” responses, once again indicate that despite there being a lot of uncertainty this quarter, our members are feeling somewhat stable.
Qualified Labor Rating
The ongoing labor shortage has been a significant challenge for businesses in the residential construction industry for some time now, which is why we added the Qualified Labor Rating and the Qualified Labor Change Prediction to our Quarterly Market Predictions Report in 2018.
Although things looked more hopeful in Q2 2020, just like Q3, this quarter’s Qualified Labor rating isn’t positive. The percentage of Poor and Horrible responses was once again 42% (up 15% from Q2’s 27%), while the percentage of Good and Excellent responses was 25%. We haven’t seen ratings this low since Q2 2019.
Qualified Labor Change
We also asked our Guildmembers, “Relative to the last six months, how has the availability of qualified labor changed?”. This quarter, 8% reported a positive change (down 1% from Q3 2020), while 27% reported a negative change (down 3% from Q3 2020). Although these predictions are still more negative compared to the start of 2020, they’re actually more positive than they were at the start of 2019.
We also asked respondents what new or existing trends they saw more of over the last quarter. The three most common emerging trends were:
- Work-friendly spaces for parents and children
- Outdoor living additions/renovations (decks, pools, landscaping, etc.)
- Open-concept in kitchen and living room to improve natural light
“People are realizing they’ll be working from home for a long time, so they’re remodeling their home to accomodate a workspace.”
In addition to emerging trends, we asked respondents which trends they saw less of in Q1 2020. According to their answers, here are the trends they believe are on the way out:
- Barn doors, shiplap, and other farmhouse-style design
- Formal dining rooms
- Gray – cabinetry, floors, and walls
“Formal dining rooms are being replaced by large, open kitchens with giant islands. Homeowners want modern and contemporary.”
- Plan in place to run a lean business in preparation for future shutdowns
- Accelerating the order process (supply chain is still very behind)
- Recruiting, recruiting, recruiting!
- Increased marketing budget (specifically social media)
- Invest in leadership development and better staff training
- Continuously improving communication with clients (expectations, processes, etc.)
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.
“We belong to leadership accountability groups such as Remodelers Advantage. We’ve set a strategic plan with long-term goals and we’ve shared everything with our company. We remain flexible when we need to adapt and reassess a situation. Forward thinking and planning will help us prepare for success in the future.”
“Consumers’ expectations continue to climb above reality in terms of price and time-lines due to HGTV and other non-factual websites looking to push a product or service “cheaply.” So we’re constantly updating our messaging and communication tools to keep perspectives and expectations in-line with the reality of a remodeling project.”