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 Q1 2021.
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 2021, 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 Q1 2021 improved slightly from Q4 2020. The percentage of members reporting feeling Good or Excellent about today’s market increased by 3% in Q1 2021 – 81% vs. 78%. This number is vastly higher than Q2’s 59%, which indicates that despite the ongoing pandemic, businesses continue to feel both optimistic and stable, potentially because the vaccine rollout has begun.
On the flip side, the percent of Poor and Horrible responses decreased very slightly, still hovering around 3% (much better than the 11% in Q2 of last year but still higher than the 1.5% in Q1 of 2020). The percent of Fair responses decreased to 16%, down 3% from Q4 2020.
While the last year has been a bit of a roller coaster ride, the number of Good or Excellent responses for the current state of the market this quarter is only 2% below where we were in Q1 2020, just prior to the pandemic, and about where we were in Q1 2019.
Expected Change in the Market
We also asked respondents to share how they expected the market would change over the quarter.
Since the start of the pandemic, when Remain the Same responses took a sharp dive in Q2 2020, the number of people predicting that the market will stay the same has increased. This quarter continues that trend. About 51% of respondents believe the market will stay the same. For those who do see change ahead, more are optimistic than pessimistic. 41% of respondents predicted the market would improve in some way (compared to 31% in Q4), and 9% believe we’ll experience a negative change (down from 20% in the last quarter).
Overall, respondents feel that the market is holding steady, and levels of optimism are back where they were at the beginning of 2020.
Expected Change in Company Performance
When it comes to company performance, the overall outlook has improved compared to Q3 and Q4 2020. About 68% of members responded with Improve or Significantly Improve, a significant increase from 51% in Q4.
This quarter, only 4% of respondents believe their company performance will Decline or Significantly Decline, which is 3% lower than last quarter and 7% lower than Q2 2020, during the start of the pandemic. Although 4% is a bit higher compared to our pre-pandemic numbers in Q1 2020 (2%), looking back at Q4 2018, negative predictions accounted for nearly 10% of all responses!
These numbers, along with the 28% of Remain the Same responses, indicate that our members are feeling optimistic about company performance.
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 Q4, this quarter’s Qualified Labor rating isn’t positive. The percentage of Poor and Horrible responses was 40% (only down 2% from Q4’s 42%), while the percentage of Good and Excellent responses was 21%.
While the percentage of Poor and Horrible responses decreased slightly, so did the percentage of Good and Excellent responses. The percentage of Fair responses increased from 34% in Q4 2020 to 39% this quarter.
We’ve been hearing from many GuildQuality members that they are extremely busy right now, sometimes booked out months in advance with work. They need to hire additional help, now more than ever, and that demand is likely contributing to these results.
Qualified Labor Change
We also asked our Guildmembers, “Relative to the last six months, how has the availability of qualified labor changed?” This quarter, 11% reported a positive change (up 3% from Q4 2020), while 27% reported a negative change (the same as in Q4 2020).
Although these predictions are still more negative compared to the start of 2020, they’re actually more positive than they were right before the pandemic, in Q1 2020.
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-from-home spaces
- More private spaces within the home that are flexible and multi-purpose
- Outdoor living spaces for gathering with friends and family
“Although opening up floor plans continues to be a top request from our clients, we are also doing projects that include personal/private spaces, too. For example, converting an unused formal dining or living room into a home office, lounge, or exercise room.”
Generally, people are very interested in improving or adding to their current living space in order to adapt it to the increased time spent at home. Home office space is crucial right now, and it seems like many people are anticipating that this need will continue after the pandemic.
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:
- Formal dining rooms
- All white color schemes, including white kitchens and cabinets
“I think [white and gray] will still have a presence in the industry, but people are embracing color on every level.”
“…we are getting less requests for white everything, which makes our designers very happy.”
- Recruiting, retaining, and training staff
- Increasing marketing efforts (website redesigns, new or increased advertising efforts, improved targeting)
- Planning ahead to allow for supply chain delays
- Planning for company growth, both in number of employees and amount of work
- Investing in leadership development and better staff training
- Continuously improving systems and processes (organization, communication, sales processes, production processes)
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.
“Now that people have adapted to our COVID lifestyle, the building industry is booming. People are investing in their homes and prioritizing the spaces in which they live and work.”
“Increased material prices and availability are becoming a big problem.”
“We are facing a virtual future.”
“We focus on taking care of employees and customers to the fullest extent possible, success takes care of itself from there.”