23 Mar, 2022, 09:00 ET
Home makeover demand, supply issues create manageable challenges for construction businesses
COLUMBUS, Ohio, March 23, 2022 /PRNewswire/ -- Home prices surged nearly 20% in 2021 – the highest calendar-year increase on record – putting a hold on house buying aspirations for many Americans. As consumers are being priced out of the market, particularly those in the middle class, a new study from Nationwide found homeowners are instead making investments to be comfortable in their current homes, and they're willing to go great lengths to do it.
The research revealed that 77% of homeowners currently working on a project in their homes have future remodeling plans and today's inflation and supply chain challenges are not deterring those plans. In fact, 71% who have upcoming projects expect to proceed with them despite higher costs, delayed timelines and limited availability of the materials needed.
Homeowners are investing to make their house their home
Homeowners shared that 7-in-10 renovations being completed are interior remodels, with kitchen (32%) and bathroom (22%) remodels leading their priorities in 2022. Almost two-thirds (62%) have a budget of $5k or more for their work, while 36% have budgeted $10k or more.
Most homeowners are focused on repairing wear and tear (57%), making their homes more enjoyable (55%), or changing something that's outdated (49%). As they invest in their homes, many are looking to stay put once the work is complete. In fact, 44% of homeowners say they would not at all consider selling their homes after their remodels. Further, only 16% of the homeowners surveyed are performing work on their homes to prepare for selling.
"Nationwide's study found most homeowners who completed major remodels in 2021 faced significant obstacles brought on by supply chain and inflation issues, such as higher material and labor costs, delayed timelines and limited material availability," said Cathy Allocco, vice president of small commercial sales and distribution at Nationwide. "What's most surprising, though, is these hurdles are not impacting their future remodeling plans with 7-in-10 homeowners saying they'll proceed with their remodeling plans in 2022 anyway, but they're looking for new ways to work with contractors to save on price."
To save money and minimize project disruptions in 2022:
- 40% of homeowners would be willing to sign a contract with a contractor to lock in pricing but wait more than three months to begin work.
- 94% would be willing to store the project materials on their own property to prevent future material cost increases, with 4-in-10 saying they'd be extremely likely to do so.
Construction business owners have adjusted to surging demand by expanding their offerings, hiring new workers, and raising wages
Since the pandemic's onset, 62% of construction business owners report seeing increased demand for home renovations and half (49%) say it's been difficult to keep up. Many are already scheduled out well into 2022, as almost two-thirds (65%) say their businesses are booked up for a month or longer and more than a quarter saying they're booked for the next four months or longer.
"Most construction owners have felt the impacts of growing demand and are taking steps to hire and retain skilled workers," said Allocco. "More than 60% have made new hires over the past two years and 57% expect greater difficulties attracting labor in 2022. To compete in today's market, many businesses are raising wages and hiring employees who specialize in new services they can offer clients."
The survey found business owners are taking new steps to keep up:
- 54% have expanded their offerings to meet demand, and of those who did, 42% hired employees who specialize in those trades.
- Half of owners (50%) have also raised wages to help with attracting and retaining talent, and another quarter (25%) would like to raise wages but cannot currently afford it.
Homeowners and construction businesses foresee continued obstacles in 2022, but they're optimistic and proceeding with work anyway
Both homeowners and contractors expect to see continued supply chain and inflation troubles as well as increased material and labor costs as they tackle projects in 2022, but only 5% of homeowners say they're planning to halt their projects as a result.
Still, 63% of homeowners are worried about high material costs, 50% are concerned about delays with materials, and 45% fear having to choose different materials for their projects than what they want due to lack of availability.
Construction owners see rough waters ahead, too, as 78% believe materials will be more expensive than in 2021, 68% expect to struggle with finding materials for projects, and two-thirds (66%) worry about materials being delayed. Despite these continued difficulties, 70% of construction business owners are optimistic about the year ahead.
To learn more about Nationwide's survey with homeowners and construction business owners, view the study findings here.
Edelman Data & Intelligence conducted a national online survey of 1,000 US homeowners that recently completed or are planning to complete a major home repair or renovation, and 200 US construction industry small business owners. The study was fielded from January 14 to January 24, 2022 and has an overall margin of error of ±3% for homeowners and ±7% for small business owners at the 95% confidence level.
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the United States. Nationwide is rated A+ by both A.M. Best and Standard & Poor's. An industry leader in driving customer-focused innovation, Nationwide provides a full range of insurance and financial services products including auto, business, homeowners, farm and life insurance; public and private sector retirement plans, annuities, mutual funds and EFTs; excess & surplus, specialty and surety; and pet, motorcycle and boat insurance. For more information, visit www.nationwide.com. Follow the firm on Facebook and Twitter.
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