If you’re like most people at this time of year, you’re reflecting on what went right over the previous year, what could be improved and what the year to come will bring. And if you’re a designer or construction professional, we’ve got some insight for you. We know that 2021 was likely a whirlwind, with high demand, supply issues, labor shortages and new ways of working. Here we’ll run through the highlights and downsides of the year, backed by Houzz research, and share ideas to help you face 2022 prepared, confident and ready for your business to reach its highest potential.

Looking Back

Business activity — and backlogs — soared. With sheltering in place and working from home the new reality, homeowners looked to upgrade their living spaces in droves. In the second quarter of 2021, design and construction businesses reported the most project inquiries since the Houzz Renovation Barometer began tracking them in 2014.

This means pros were hired more frequently as well. A whopping 89% of homeowners hired help for kitchen remodels in 2021, according to the U.S. Houzz Kitchen Trends Study, and hiring surged across all the major kitchen pro categories: designers, decorators, cabinetmakers and general contractors. About 84% of homeowners turned to pros for bathroom remodels as well, with about half of those bringing on general contractors, according to the U.S. Houzz Bath Trends Study. More bath designers, remodelers and decorators booked projects in 2021 as well. Kitchens and baths continue to be the most popular spaces to renovate.

With design and construction firms unable to keep up with demand, project backlogs gradually escalated over the year, reaching record highs. For architecture and design firms, wait times in the fourth quarter of 2021 ranged from just over 6 weeks in the West North Central division to about 11 in New England. For construction firms in the same time period, lags ranged from just over 9 weeks in the Mountain division to almost 14 in New England.

Supply and labor shortages shot up. Increased consumer demand wasn’t the only catalyst for backlogs, though. Product and material delays spurred by supply-chain issues, along with labor shortages and increased costs, played their part. And sheltering-in-place orders around the country meant many businesses simply couldn’t get out to complete projects.

More than half of home construction and design firms faced product and material shortages and increased costs at the beginning of Q4 2021, according to the Barometer. As early as the second quarter, more than two-thirds reported shelling out more for raw materials, such as lumber, copper, steel, plastic and aluminum, due to tariffs and other trade restrictions on imported goods as well as lack of availability.

As for labor shortages, around four million Americans quit their jobs in April 2021 — a 20-year record, according to the U.S. Labor Department. More than 9 in 10 construction businesses reported moderate to severe shortages of skilled labor in Q4, according to Houzz research. How short, exactly? The scarcity of cabinet specialists actually doubled between 2019 and 2021.

Pivoting became the plan. Beginning in 2020 and continuing into 2021, companies embraced remote collaboration tools. Video conferencing became a go-to tool, as did other industry-focused software platforms. Houzz Pro is the solution of choice for many of you, making working with clients remotely easier by offering cloud-based tools for scheduling meetings, collaborating and managing projects. 

Looking Ahead

Forecasted outlook: sunny. Expect high demand for home building and renovation services and goods to continue in 2022, as the core reasons for the recent surge are still in place. Moreover, housing shortages and home prices have been increasing nationwide. In fact, home prices in summer 2021 reached their highest level in 45 years, per CoreLogic data. That means homebuyers will likely be more willing to invest in houses that require everything from minor repairs to major renovations. And the majority of existing homes in the U.S. are now 40 years old or older, according to the American Housing Survey, leading to a higher demand for repairs.

Optimism is the name of the game for 2022, per preliminary Houzz research on the state of the industry. Among residential architecture and design businesses, 73% report having a positive outlook, as do 74% of construction firms. Despite the previous supply-chain issues, most residential remodeling and design firms believe that products and materials will become more widely available. Moreover, about a third of businesses expect revenue to grow by at least 10%. 

Equity in homes has increased substantially as well. Per CoreLogic research, mortgage-holding U.S. homeowners saw their equity increase by more than 31% year over year — an increase of more than $3.2 trillion — meaning they have much more to borrow against for renovations, additions and repairs.

Staffing shortages persist. Given the current labor shortages and increasing demand for services, you’ll likely still grapple with staffing issues. However, creative hiring approaches can help. More than 90% of U.S. companies across all industries are also raising wages, according to the CNBC Global CFO Council survey. And software that helps ease administrative tasks and project management, such as Houzz Pro, can reduce staffing needs.

Unpredictability reigns for the supply chain. With demand for materials and goods only increasing, prices and availability are expected to remain unpredictable. Oh, and don’t forget the shortage of almost 80,000 truck drivers nationwide. That already significant lack may in fact worsen this year, according to Forbes, due not just to the pandemic but to an aging workforce, age restrictions, pay concerns and more.

Despite the above challenges, companies now have almost two years of experience in navigating the new reality. Many have even grown and are thriving! Check out some personal strategies for success below.

Top Pro Tips for Thriving Amid Uncertainty

1. Prioritize innovation. Designer Maegan Swabb rethought her business from the ground up during the pandemic, bringing in an entirely new team — and her company grew in spite of all the market issues. Her focus is always on innovating rather than resting on any laurels. “How can we be innovative, and how can we change the industry?” she says. “I’m constantly thinking about those things.”

2. Find your “North Star.” No matter what the market throws at you, discovering and staying true to your specific design purpose will help you achieve your goals, believes designer Katie Gutierrez. “I think the most important thing to start with is to establish a ‘North Star’ and to know where you’re headed,” she says. “Interior design is your vehicle. What is that gift you’re bringing?”

3. Tap into technology. Remodeling company Entire Home was founded in 2017 with just two sales reps and three general contractors. Five years later — two of those mid-pandemic — it has five sales reps, 20 subcontractors and six admin staffers. CEO Blake Eastwood prioritized smart tech solutions, such as Houzz Pro, for handling operational tasks from the start. He strongly believes in identifying a specific business process and then discovering “what tools we have to ensure that our processes are more efficient, and always work on that,” he says, adding: “I use Houzz Pro to optimize my business process all the time.” 

No matter what lies on the market’s horizon, these hard-won personal insights can help you chart a course for business success in 2022 and beyond.