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Wednesday, April 9, 2003 Residential remodelers report confidence going into 2003 By Chad
Floyd,
Professional remodeling switched into lower gear at the end of 2002 as residential property owners put off significant additions and improvements in response to weaker economic conditions and seasonal factors, according to results of the National Association of Home Builders' Remodeling Market Index, released in late January. Remodelers reported a fairly weak amount of activity near the end of what was overall a very strong year for home improvements. Some of the decline was undoubtedly due to owners' decisions to delay property improvements in light of economic jitters. However, it's not unusual for fewer remodeling jobs to be getting underway in the winter months and during the holidays. What's encouraging is that the vast majority of remodelers surveyed for the RMI are expecting solid dollar volumes and profit margins in 2003. The RMI is based on a quarterly survey of more than 600 professional remodelers, whose answers to a series of questions are assigned numerical values in order to calculate two separate indexes. The first index gauges current market conditions and is based on remodelers' reports of major and minor additions and alterations, plus maintenance work and repairs, on both owner- and renter-occupied dwellings. The second index gauges expectations for the near future and is based on remodelers' reports of their calls for bids, amount of work committed for the next three months, job backlogs and appointments for proposals. A variety of "special questions" are also asked at the end of the survey to help pinpoint market perspectives. Remodelers reported the exact same level of maintenance and repair work on homes and apartments in the final quarter of 2002 as they did at year-end 2001. This indicates that there's a baseline of activity when it comes to essential work that owners commission to keep their homes and apartments functioning properly even as they postpone the more discretionary improvements and additions. Though remodelers in all four regions of the country saw less business in the final quarter of 2002 than they did in the previous quarter, remodelers in the South and West were slightly busier at the end of 2002 than at the end of 2001. Results of the "special questions" section of the RMI revealed that remodelers are not only pleased with their total business activity for 2002, but that they are expecting even better results in 2003. For example, asked about the number of remodeling jobs completed by their company in 2002, 83 percent said that volume had either increased or stayed the same, while only 27 percent said it had decreased. Moreover, fully 89 percent said they expected the dollar volume of their remodeling jobs to either increase or stay the same in 2003 compared to 2002, while 91 percent said they expected profit margins of their remodeling businesses to increase or stay the same this year in comparison to 2002. The special questions section sought a slightly longer-range view of market expectations than the RMI's future expectations index, which gauges remodelers' confidence in conditions approximately three months out. The bottom line is remodelers aren't expecting an instant rebound in remodeling jobs this year, but are confident that activity will ratchet back up during the spring home improvement season. Factors such as rising home values, which give people more equity to borrow against for home improvements, plus stellar financing conditions, will continue to drive professional remodeling in 2003. (Chad Floyd, who is with Chadwick Homes, is president of the Home Builders Association of Midwest Georgia, which serves a membership of approximately 550 builders and associate members in Fayette, Coweta, Spalding, Heard, Meriwether, Pike, Upson and Lamar counties.)
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