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Why the Remodeling Market is Shrinking - and What to Do About It
Remodelers: we’ve got bad news and good news. According to Harvard’s Joint Center for Housing Studies the residential remodeling market is currently on a decline. Homeowner spend on improvements and maintenance, which has consistently grown year over year, is expected not just to slow in growth, but actually decrease in 2024.
That’s the bad news. The good news is, you can still be successful, and even grow, this year—the key is to understand why this is happening and take the right strategies to adapt. And that’s exactly what this post will help you to do.
Table of contents
- What exactly is declining?
- Why is remodeling spend on the decline?
- Eight tips to keep your remodeling business strong
What exactly is declining?
According to the LIRA (Leading Indicator of Remodeling Activity), homeowner spend on improvement and maintenance has been on the decline since Q4 2022. Here are the specifics:
- Year over year spend is projected to shrink by 2.7% in Q1 2024, by 6.3% in Q2, and by 7.7% in Q3.
- Annual spending on homeowner improvements and repairs is expected to decrease from $489 billion today to $452 billion over the course of 2024. That’s a $33 billion drop.
In the above-linked LIRA report, Abbe Will, Associate Project Director of the Remodeling Futures Program, states that “While the rate of market decline should decelerate significantly in the second part of the year, 2024 is shaping up to be a challenging year for home remodeling.”
Why is remodeling spend declining?
There are three core reasons why remodeling spend is expected to decrease in 2024.
- Slowed growth post-pandemic: There was a boom in remodeling during the pandemic as people were spending more time in their homes, so naturally, growth slowed as life began to return to normal. This Forbes article on the issue goes into more depth on that. However, growth in remodeling spend is slowing so much that it’s actually projected to decline. That brings us to the next two factors.
- Weak housing market: A large portion of remodeling and repair services are done in accordance with home sales, and right now, home sales are slow due to high interest rates as well as softening house appreciation.
- Low confidence in the economy: As of HIRI’s Home Improvement Spend Outlook in August, consumer sentiment is the lowest it’s been in decades. When sentiment is low, spend is low.
How to keep your remodeling business going strong in 2024
With fewer people looking to remodel, your audience size is going to shrink and competition is going to increase. Here are some tips to help you adapt to what could be a challenging year for remodelers.
1. Don’t stop marketing
People may not be in the market for remodeling projects right now, but that doesn’t mean they won’t ever be. And the biggest influence on a customer when choosing a business is whether or not they’ve heard of you before. So even if your ads and marketing campaigns aren’t generating as many leads as you’d like right now, keep running them. They are generating brand awareness, which means when the time comes that people do need your services, your business will be the one that is top of mind.
In fact, one study found that 82% of participants chose a brand they were familiar with as their first click, regardless of where it ranked on the search engine results page.
2. Widen your reach
As I just mentioned, you should continue to run your campaigns. But because demand is lower, you may need to cast a wider net in order to achieve the same lead volume. Here are a few ways you can do this:
- Add more zip codes to your service area in Google Local Services Ads
- Broaden your audience targeting to include more demographics
- You may even consider offering additional services to appeal to a wider audience.
3. Think longer term
Keep the big picture in mind. Every industry and market experiences fluctuations over time, and we’re still stabilizing out from the impact of COVID. 2024 might be a challenging year, but that doesn’t mean remodeling is destined to be unprofitable forever.
So while it’s important to be realistic, don’t let doubt or fear get in your way. Dig your heels in, use the resources available to you, and use the tips in this post to make it through. The strategies you put in place to survive during trying times are going to make you thrive when the market opens back up again.
4. Focus on free marketing strategies
With business being slower, your budget may be limited. If this is the case and you don’t have the resources to invest in paid ads, there are plenty of free, yet powerful, marketing strategies that can generate leads and brand awareness for your business. This includes:
- Social media: Post helpful tips and how-tos to build trust and authority, treat your Facebook page as a local listing (because it is!), and build community around your brand by using your page to post company and store updates.
- Blog content: Write keyword-targeted posts on topics your ideal customers are looking up online (What to look for in a furnace, how to troubleshoot a broken air conditioner, etc.) to get found on search engines and bring traffic to your site.
- Conversion rate optimization: Is your website just an electronic brochure for your business? Make sure it is optimized with consistent branding, prominent calls to action, lead capture forms, persuasive messaging, and clean navigation—all of which will help you turn more visitors (the visitors you’re generating with your blog and listings) into leads and customers.
- Reviews and referrals: Proactively ask customers to leave reviews and refer your business to others. We’ve got plenty of tips on how to get more reviews as well as how to earn referrals.
- Local SEO: 65% of remodeling conversions start with an online search, so it’s crucial to optimize your website and listings to rank as high as possible in relevant search results. This local SEO guide gives you plenty of strategies to employ—and they’re all free!
5. Keep up with trends
It’s not that there’s no one looking to remodel in 2024, just fewer people than last year. In this article from Harvard’s Remodeling Futures Program at the Center, Project Director, Carlos Martin says, “The magnitude of the impact may be offset if owners who are locked into their current homes with ultra-low mortgage rates continue to renovate to meet changing needs or take advantage of new federal incentives for energy-efficiency retrofits.”
So make sure you do what you can to stand out to the people who are looking for projects to be completed. One way to do this is to stay on top of trends—both general consumer trends as well as trends within the home remodeling space. For example:
- Buyer journey trends like text communication, self-service options, online booking, and virtual tours.
- Design trends such as popular colors, looks, materials used, sustainability, and more.
6. Optimize your set and close rates
You should always have this mindset, but with fewer leads to go around this year, it’s more important than ever to make sure you get as many appointments and sales as you can out of those leads. To do that, you need to treat every lead like they’re your only lead. Give them the special treatment to ensure they choose you over competitors. Here’s how:
- Reach out fast (for new leads this is within five minutes; for quoted leads, this is within two days of the appointment).
- Use multiple channels, and lead with text
- Use short, personalized messages
- Follow up until they respond. This can be anywhere from 5-12 messages.
For help with this, use our free Conversation Optimization Playbook.
7. Nurture your database
This is another strategy that you can (and should) always be employing, but that is especially beneficial when business is slow. Over time, your database will inevitably accumulate aged leads. But leads fall off the map for more reasons than simply just not being interested anymore. We live in a busy and chaotic world—priorities shift, conversations fall through the cracks, things come up. Having a system in place to check in on and reengage aged leads can resurface opportunities and unlock revenue you didn’t know you had.
8. Use automation
If you’re thinking that doing strategy #6 for every contact is impossible, and if you’re overwhelmed at the prospect of keeping track of how many days have passed since X, Y, or Z event for every contact (strategy #7), you are not alone. These tasks are impossible to do—manually. But with automation, it’s actually easy.
With a platform like Hatch, which connects to your CRM and lead sources, you can create automated outreach based on particular conditions—new leads, those who haven’t engaged in X days, those who canceled X days ago, those who had a project completed X days ago, and so on.
This makes it easy to stay on top of contacts across the customer journey and keep your funnel active—through lead outreach, sales follow-up, lead nurturing, aged lead rehash, customer engagement, and more.
Keep your remodeling business strong in 2024
While it can feel discouraging that homeowners are spending less on remodeling this year, that doesn’t mean your business has to suffer! Hopefully with a better understanding of the trend and the tips we’ve provided in this post, you feel equipped to keep your revenue (and morale) strong. To recap, here are those tips:
- Don’t stop marketing
- Widen your reach
- Think longer term
- Focus on free marketing strategies
- Keep up with trends
- Optimize your set and close rates
- Nurture your database
- Use automation