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Most Renovation and Design Firms Are Bullish on 2018
The Houzz 2018 State of the Industry report reveals optimism about business and diverging views on the U.S. economy
Most firms across industry groups are optimistic. Houzz tracks seven industry groups: architects, interior designers, design-build firms, building and renovation specialists, landscaping and outdoor specialists, decorating specialists, and building firms that include general contractors, remodelers and builders.
The majority of companies across all the groups rated their overall business outlook for 2018 as good (medium green) or very good (darkest green). Companies in the construction and outdoor industry sectors are particularly optimistic. For example, 42 percent of design-build firms rated their overall business outlook as “very good,” and 46 percent rated it as “good.”
The majority of companies across all the groups rated their overall business outlook for 2018 as good (medium green) or very good (darkest green). Companies in the construction and outdoor industry sectors are particularly optimistic. For example, 42 percent of design-build firms rated their overall business outlook as “very good,” and 46 percent rated it as “good.”
High expectations for both revenues and profits. The majority of firms in all the industry sectors that Houzz tracks reported that they expect growth in both revenue and profits this year.
Among all the industry groups, architects were the most cautious about potential profit changes; this group had the lowest share of firms predicting increases (56 percent). Eleven percent of architecture firms said they expect profit decreases, the highest percentage of all the industry groups.
Among all the industry groups, architects were the most cautious about potential profit changes; this group had the lowest share of firms predicting increases (56 percent). Eleven percent of architecture firms said they expect profit decreases, the highest percentage of all the industry groups.
Most firms expect demand for their services to improve. Two-thirds of companies across industry groups expect demand for their services to improve in 2018. Again, architecture firms were the most cautious segment.
In general, most firms in all the industry groups expect local economic conditions to improve. However, regarding the national economy, they were polarized.
In general, most firms in all the industry groups expect local economic conditions to improve. However, regarding the national economy, they were polarized.
Split views on the national economy. The industry sectors focused on building are most bullish about the national economy. Thirty-eight percent of building and renovation specialty firms, 35 percent of general contractors, remodelers or builders, and 31 percent of design-build firms said they expect the national economy to improve.
However, some firms expect the opposite, predicting that the national economy will worsen. Architects expressed this view, with 28 percent expecting the national economy to worsen in 2018. Twenty-four percent of interior designers expect the national economy to worsen.
However, some firms expect the opposite, predicting that the national economy will worsen. Architects expressed this view, with 28 percent expecting the national economy to worsen in 2018. Twenty-four percent of interior designers expect the national economy to worsen.
Four industry sectors expect faster revenue growth in 2018. Interior designers and the three specialty categories — which include building and renovation specialties, such as carpenters and cabinet installers; landscaping and outdoor specialties, such as landscape architects and pavers; and decorating specialties, such as decorators and providers of window coverings — said they expect the 2018 annual growth rate of revenue, or total sales, to exceed the previous year’s growth rate. For example, interior designers expect an (average) 11.1 percent increase in revenues for 2018, compared with the (average) 7.4 percent increase in revenue these firms welcomed in 2017.
However, two groups expect that growth will slow this year — a change from 2017, when all seven groups expected growth rates to increase. Architects and design-build firms expect that growth will slow this year, meaning that they expect revenue will still grow but at a slower pace.
The industry sector composed of general contractors, remodelers and builders expects revenue growth to continue at about the same pace as the year before.
However, two groups expect that growth will slow this year — a change from 2017, when all seven groups expected growth rates to increase. Architects and design-build firms expect that growth will slow this year, meaning that they expect revenue will still grow but at a slower pace.
The industry sector composed of general contractors, remodelers and builders expects revenue growth to continue at about the same pace as the year before.
Many firms expect labor availability to decrease. Labor shortages have been a problem in the industry for several years, and many firms don’t anticipate this changing in 2018.
“Labor shortages in the construction trades are unlikely to ease up in 2018. The influx of new construction-related workers in the industry is limited, while the existing labor pool is far below the levels before the recent recession, and the labor pool is aging,” says Nino Sitchinava, principal economist at Houzz.
“Labor shortages in the construction trades are unlikely to ease up in 2018. The influx of new construction-related workers in the industry is limited, while the existing labor pool is far below the levels before the recent recession, and the labor pool is aging,” says Nino Sitchinava, principal economist at Houzz.
Many firms predict labor costs will rise. With labor shortages continuing, many firms predict that the cost of hiring workers will increase in 2018.
Similarly, one in two companies in each industry group expect the cost of products and materials to increase in 2018.
The 2018 Houzz State of the Industry study surveyed nearly 3,400 residential renovation and design firms on Houzz from November 28, 2017, to January 31, 3018.
Download the full study here
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How Renovation and Design Businesses Fared in 2017
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Similarly, one in two companies in each industry group expect the cost of products and materials to increase in 2018.
The 2018 Houzz State of the Industry study surveyed nearly 3,400 residential renovation and design firms on Houzz from November 28, 2017, to January 31, 3018.
Download the full study here
More
How Renovation and Design Businesses Fared in 2017
Find a pro to work with on Houzz
Read on for insights from the 2018 Houzz State of the Industry study, and find out what nearly 3,400 residential renovation and design firms on Houzz are predicting for the current year.