Contractor labor shortages driving up remodeling costs for homeowners
Portland Stair
Staircase remodeling project from Portland Stair Company at Houzz.com

Photo By Portland Stair www.portlandstaircompany.com http://www.houzz.com/photos/63005426/Dunthorpe-contemporary-staircase-portland

PALO ALTO, Calif.  – Though labor shortages drive project costs higher, Houzz Q3 2016 quarterly Renovation Barometer finds confidence high across remodeling industry, even with a seasonal slowdown.
 
Houzz.com, a popular platform for home remodeling and design, tracks confidence in the home renovation market among industry professionals in these quarterly statistics.
 
Labor shortages, an incrasing complaint in all construction and remodeling segments, continues to be a challenge, with nearly four in five remodelers and design-build firms reporting moderate to severe labor shortages of skilled trades and general laborers.
 
Half of general contractors, remodelers and design-build firms report this is driving increases in costs to hire subcontractors (53 percent), while a third report higher costs due to an increase in compensation for their own employees (37 percent).
 
These rising costs translate to increased project costs to clients, say 59 percent of professionals. The amount of time it takes to complete a project has also increased for half of firms. However, very few professionals report a decline in project quality (10 percent) and client satisfaction (11 percent).
 
The Q3 2016 Barometer reflected widespread quarter-over-quarter confidence for all industry sectors including architects, designers, general contractors/remodelers, design-build, specialty building/renovation and specialty landscape/outdoor, with readings of 60* or higher. The outlook for Q4 continues to be positive for all sectors despite expected seasonal slow down. Architects, designers, design-build companies, GCs and specialty building/renovation firms report scores up to five percent lower than Q2 2016 scores. Landscape/outdoor specialty firms are experiencing a stronger seasonal cooling with a 15 percent drop in confidence. 
 
“The sustained growth in consumer demand for residential remodeling services, as indicated by the Houzz Renovation Barometer, is naturally driving prices for remodeling services up. Yet, with systematic labor shortages and no major shift in labor conditions expected in the near term, consumers will continue to experience significant increases in project costs and difficulty finding qualified remodelers,” said Nino Sitchinava, principal economist at Houzz. “At the same time, remodelers will continue to be squeezed to do more with less, be more selective about the nature of projects they take on and be more cautious about committing to project cost and timeline estimates.”
 
New Business Growth Continues
The majority of firms continue to report quarter-over quarter increases in both the number of inquiries and the number and size of new projects in the third quarter of 2016. Scores for new inquiries and number of new projects were unchanged or declined by only one to five percent across all industry sectors, other than landscape/outdoor specialties, showing confidence in market gains at the onset of seasonal slowdown.
 
Year-Over-Year Gains Continue
Year-over-year Barometer readings were high for the third quarter of 2016 (64-77), indicating optimism in continued year-over-year gains in the home renovation market. For GCs, remodelers and design-build firms, confidence held or slightly increased, relative to Q2 2016. Readings increased six percent for designers, but decreased four percent for architects. 
 
 
There are more than one million active home remodeling and design professionals on Houzz, including architects, interior designers, general contractors and design-build firms. 
 
Notes to Editors
The Houzz Renovation Barometer study is conducted quarterly and presents analysis of responses to an online survey sent out to a national U.S. panel of architects, interior designers, general contractors/remodelers, design-build firms, and building/renovation and landscape/outdoor specialties. The greater the index value relative to 50, the greater the proportion of firms reporting increases in quarterly business activity than those reporting decreases. N=2,575. 
 
*The greater the index value relative to 50, the greater the proportion of firms reporting increases in quarterly business activity than those reporting decreases. 
 
Houzz is a leading platform for home renovation and design, providing people with everything they need to improve their homes from start to finish – online or from a mobile device. From decorating a small room to building a custom home and everything in between, Houzz connects millions of homeowners, home design enthusiasts and home improvement professionals across the country and around the world. With the largest residential design database in the world and a vibrant community empowered by technology, Houzz is the easiest way for people to find inspiration, get advice, find products and hire the professionals they need to help turn their ideas into reality. Headquartered in Palo Alto, Calif., 

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About the author
Bill Esler | ConfSenior Editor

Bill wrote for WoodworkingNetwork.com, FDMC and Closets & Organized Storage magazines. 

Bill's background includes more than 10 years in print manufacturing management, followed by more than 30 years in business reporting on industrial manufacturing in the forest products industries, including printing and packaging at American Printer (Features Editor) and Graphic Arts Monthly (Editor in Chief) magazines; and in secondary wood manufacturing for WoodworkingNetwork.com.

Bill was deeply involved with the launches of the Woodworking Network Leadership Forum, and the 40 Under 40 Awards programs. He currently reports on technology and business trends and develops conference programs.

In addition to his work as a journalist, Bill supports efforts to expand and improve educational opportunities in the manufacturing sectors, including 10 years on the Print & Graphics Scholarship Foundation; six years with the U.S. WoodLinks; and currently on the Woodwork Career Alliance Education Committee. He is also supports the Greater West Town Training Partnership Woodworking Program, which has trained more than 950 adults for industrial wood manufacturing careers. 

Bill volunteers for Foinse Research Station, a biological field station staddling the border of Ireland and Northern Ireland, one of more than 200 members of the Organization of Biological Field Stations.