The third quarter has come and gone but its effects are still reverberating.
WarmlyYours saw significant third quarter growth in consolidated sales across a broad swath of product lines. This sales growth is in line with the analysis found within recent indicators of remodeling trends. The most recent Leading Indicator of Remodeling Activity (LIRA), a quarterly assessment and projection of national remodeling trends composed by the Joint Center for Housing Studies of Harvard University, predicts that annual consumer remodeling expenditures will exceed $327 billion by the third quarter of 2017, a level that hasn’t been seen since 2006. It further finds that change-of-rates for remodeling expenditures will accelerate positively until they reach 8.3% in Q2 2017, before tempering slightly to 7.5% in Q3 2017.
According to Chris Herbert, the managing director for the Joint Center, this is due to several factors.
“Homeowner remodeling activity continues to be encouraged by rising home values and tightening for-sale inventories in many markets across the country,” said Herbert.
The 2016 housing market has turned into serious floor heating sales
What WarmlyYours has seen, in terms of radiant heating sales, is substantial growth in two of our primary product lines, floor heating and snow melting systems. Floor heating led the charge with 62% growth in consolidated quarterly sales and snow melting grew 22% in the quarter. Why is that? People are remodeling like crazy.
As we see in the 2016 Houzz and Home report, a lot of remodeling is triggered by either the purchase of a new home or the desire to sell a home, both of which are happening a lot right now because wages are increasing nationally and so are home values. However, as Lawrence Yun, the chief economist for the National Association of Realtors said, “The one major predicament in the housing market is without a doubt the painfully low levels of housing inventory in much of the country.”
This means that the good times, in terms of remodeling activity, might stall when houses, due to demand, become too pricey to actually sell (mostly because the seller is going to be unable to find an affordable house to live in after they sell their overpriced home).
Floor heating sales are actually growing in areas with housing shortages
WarmlyYours saw huge growth in both the Milwaukee and Denver markets, both of which have average home prices that are significantly larger than their average home values. In Milwaukee, the average listed home price is 30% larger than the home value, or market value, of the average home. In Denver, the average home price is nearly $100,000 higher than the average home value.
So if we apply the microcosm of these two markets, where the price of a home has been inflated by a shortage of supply in relation to the demand, to the national housing landscape, it seems that there is hope.In fact, the stilting of housing sales might actually turn into more remodeling because some consumers may choose to simply improve their existing homes. And there is no better time to incorporate floor heating, than when you’re remodeling.
To read more about Q3 2016 sales for WarmlyYours, or about how we’re reading the “tea-leaves” of the remodeling market, check out our Third Quarter Industry Report.