Dive Brief:
- According to the Harvard Joint Center for Housing Studies’ Housing Perspectives, during the U.S. Great Recession, the home remodeling sector saw somewhat of a shift, with a splintering of the industry resulting from the growth of smaller companies and the self-employed.
- The JCHS report also said that while the largest remodelers forfeited some of the "concentration gains" they earned in the housing boom, that end of the market has continued to consolidate.
- The JCHS report is based on the U.S. Census Bureau’s 2012 Economic Census and Nonemployer Statistics report, provided once every five years, that measures both payroll and self-employed business data.
Dive Insight:
The JCHS reported that the remodeling industry as a whole saw the number of contractors increase by 10% from 2007 to 2012, with 12% more general remodeling firms (263,000) and 8.5% more special trade remodelers (450,000). Self-employed contractors, however, scored the biggest growth numbers — an 11% increase of special trade contractors and 17% more general remodelers — while the number of payroll contractors rose only 3.5%.
Self-employed contractors, according to the JCHS, grew from 64% in 2002 to 70% in 2012, but 44% had revenue of less than $50,000 per year. However, the number of smaller contractors with income less than $150,000 grew by 15%, while those with revenue of $150,000 or greater increased by only 3%. This fact led the JCHS to note that the most fragmentation of the sector occurred among the smaller contractors.
In terms of total revenue, the big guys came out on top. Even though remodeling firms with more than $1 million in revenue represented only 13% of total remodeling payroll businesses in 2012, they represented 62% of total industry revenue and employed almost 50% of remodeling industry workers.
The 2016 Houzz State of the Industry report released in January revealed that more than 50% of renovation and remodeling firms on Houzz expect at least a 10% bump in revenue in 2016, and an even more optimistic 20% predict a growth in receipts of more than 15%. Also in January, experts predicted that along with strength in the single-family market this year, the remodeling sector will have a banner 2016.