Industry Research
Remodeling and Design Pros Expect a Strong Business Year in 2020
Most pros expect growth despite rising labor and material costs, the 2020 U.S. Houzz State of the Industry report shows
Companies across the remodeling and design industries are anticipating positive business growth in 2020, despite headwinds in the form of rising costs for labor and materials, according to the latest research from Houzz.
Read on for more details from the 2020 U.S. Houzz State of the Industry report, which summarizes the responses of more than 3,000 home renovation and design professionals firms.
Read on for more details from the 2020 U.S. Houzz State of the Industry report, which summarizes the responses of more than 3,000 home renovation and design professionals firms.
More Than Half of Firms Report a Positive Business Outlook for 2020
The majority of residential remodeling and design firms — 65% to 82% of each industry group — report that they expect 2020 to be a good or very good year overall for their businesses. This perspective is a slight improvement across groups compared with 2019, but is less positive compared with 2018.
For 2020, general contractors have the most positive outlook among the seven industry groups, with 82% of firms reporting a good or very good outlook for this year. Architects are the most conservative group in terms of overall business outlook for 2020, with 65% reporting a good or very good outlook. Among the rest of the groups, 74% to 79% of each report a good or very good outlook.
(Architects’ expectations regarding revenues, profits, demand for their services and the performance of the national economy this year are all less positive compared with those of the other groups.)
The majority of residential remodeling and design firms — 65% to 82% of each industry group — report that they expect 2020 to be a good or very good year overall for their businesses. This perspective is a slight improvement across groups compared with 2019, but is less positive compared with 2018.
For 2020, general contractors have the most positive outlook among the seven industry groups, with 82% of firms reporting a good or very good outlook for this year. Architects are the most conservative group in terms of overall business outlook for 2020, with 65% reporting a good or very good outlook. Among the rest of the groups, 74% to 79% of each report a good or very good outlook.
(Architects’ expectations regarding revenues, profits, demand for their services and the performance of the national economy this year are all less positive compared with those of the other groups.)
Firms expect slower revenue growth in 2020. Despite the overall general optimism regarding business this year, five of the seven industry groups have lower 2020 revenue (sales) growth expectations compared with their growth expectations in the previous year. The five groups with lowered expectations are architects, interior designers, general contractors, renovation specialty businesses and outdoor specialty businesses.
That said, revenue growth expectations are still relatively strong. Six of the industry groups report that they expect revenue to grow in the upper single digits this year, ranging from 6.9% to 9.1%. Architects again are more conservative, predicting an average annual growth rate of 4.2% for their sector in 2020.
Design-build firms are the only industry group with higher growth expectations for 2020 than for 2019. Decorating specialty firms have expectations on par with their expectations for the previous year.
That said, revenue growth expectations are still relatively strong. Six of the industry groups report that they expect revenue to grow in the upper single digits this year, ranging from 6.9% to 9.1%. Architects again are more conservative, predicting an average annual growth rate of 4.2% for their sector in 2020.
Design-build firms are the only industry group with higher growth expectations for 2020 than for 2019. Decorating specialty firms have expectations on par with their expectations for the previous year.
Firms expect profits to increase in 2020. The majority of firms in six of the seven industry groups report that they expect profits to rise in 2020. Only among architects does the majority not expect a profit increase; only 46% of them expect higher profits in 2020. Some firms in each group (7% to 16%) expect that profits will decline in 2020.
Firms Confident in Demand for Services in 2020
In all industry groups, the majority of firms (58% to 69%) anticipate that demand for their services will improve in 2020. The majority of firms across industry groups also expect economic conditions to stay about the same locally.
In all industry groups, the majority of firms (58% to 69%) anticipate that demand for their services will improve in 2020. The majority of firms across industry groups also expect economic conditions to stay about the same locally.
An Improved Outlook on the National Economy for 2020
A sizable share of firms (24% to 43% across industry groups) report that they expect the national economy to worsen in 2020. But this is a notably smaller slice of firms compared with last year, when 35% to 41% of six industry groups — and 61% of architects — predicted a worsening national economy.
A sizable share of firms (24% to 43% across industry groups) report that they expect the national economy to worsen in 2020. But this is a notably smaller slice of firms compared with last year, when 35% to 41% of six industry groups — and 61% of architects — predicted a worsening national economy.
Firms Expect Business Costs to Rise
While firms report strong optimism regarding revenue and profit growth and demand for their services, they also report that they expect to face challenges that will affect their cost of doing business. Many firms (41% to 65%) report that they expect the cost of doing business overall to rise this year. This expectation is slightly improved compared with the outlook in the previous year, when 48% to 68% of firms across the various groups expected rising business costs.
Firms expect labor challenges to get worse. A greater share of companies (21% to 49%) say they expect labor availability to worsen in 2020 compared with the share of firms that expected this outcome the previous year (19% to 47%).
About half of firms in six of the seven industry groups expect labor costs to worsen in 2020.
While firms report strong optimism regarding revenue and profit growth and demand for their services, they also report that they expect to face challenges that will affect their cost of doing business. Many firms (41% to 65%) report that they expect the cost of doing business overall to rise this year. This expectation is slightly improved compared with the outlook in the previous year, when 48% to 68% of firms across the various groups expected rising business costs.
Firms expect labor challenges to get worse. A greater share of companies (21% to 49%) say they expect labor availability to worsen in 2020 compared with the share of firms that expected this outcome the previous year (19% to 47%).
About half of firms in six of the seven industry groups expect labor costs to worsen in 2020.
Firms predict that product and material costs will increase. Half or more of firms (51% to 58%) say they expect product and material costs to rise in 2020, in line with the share of firms having that expectation in the previous year (50% to 61%).
Comparing Past Expectations to Actual Past Results
For context, it’s helpful to look back at how firms’ revenue growth expectations have matched actual performance. This chart shows the expected annual rate of revenue growth across the seven industry sectors compared with the actual rate of revenue growth for that year. As you can see from the numbers, no one seems to have a crystal ball.
For context, it’s helpful to look back at how firms’ revenue growth expectations have matched actual performance. This chart shows the expected annual rate of revenue growth across the seven industry sectors compared with the actual rate of revenue growth for that year. As you can see from the numbers, no one seems to have a crystal ball.
The 2020 U.S. Houzz State of the Industry study includes responses from 3,094 firms on Houzz that offer services related primarily to residential renovation or design. The survey was fielded from Dec. 3, 2019, to Jan. 10, 2020.
Download the full study
And to get a sense of how remodeling and design businesses performed in 2019, read this story.
More on Houzz
Read more stories for pros
Browse millions of photos for inspiration
Talk with your peers in the Pro-to-Pro discussions
Join the Houzz Trade Program
Download the full study
And to get a sense of how remodeling and design businesses performed in 2019, read this story.
More on Houzz
Read more stories for pros
Browse millions of photos for inspiration
Talk with your peers in the Pro-to-Pro discussions
Join the Houzz Trade Program
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To put together the State of the Industry report, Houzz surveyed firms in seven categories. The first four categories are architects, interior designers, building companies (including general contractors, remodelers and builders) and design-build firms.
The next three categories are different types of specialty firms. Building and renovation specialty firms include pros such as carpenters and cabinet installers. Landscaping and outdoor specialty firms include pros such as landscape architects and pavers. Decorating specialty firms include pros such as decorators and providers of window coverings.