As home buying continues to be on the decline, many homeowners are turning to remodeling to update and repurpose their existing living spaces. While renters don’t have the freedom to tear down walls and apartment owners can’t afford constant renovations, the remodeling industry reflects current trends and can be a source of inspiration regarding what people want in a living space today.
According to the NAHB’s newly released 2017 Remodelers’ Cost of Doing Business Study, surveyed remodelers reported an average gross profit margin of 28.9 percent in 2015, a steady increase from 26.8 percent in 2011. During the same period, average net profit margin grew from 3.0 to 5.3 percent, demonstrating the popularity of home remodeling.
At a press conference at the International Builders’ Show in Orlando, Fla., experts in the industry discussed the top desired changes homeowners make when remodeling, many of which can be applied to multifamily properties marketed to renters-by-choice, who are often looking for the amenities and comfortable living of a home with the convenience and mobility of a rental. As homeowners remodel to improve the value of their home, multifamily communities can apply the same desired features to increase perceived value and resident retention.
“Remodelers were forced to adopt new strategies to survive the downturn, and keeping those business models in place as the market grows has helped improve their margins,” said Tim Shigley, a remodeler from Wichita, Kan., and NAHB’s 2016 Remodelers Chair. He said at the press conference that the industry is seeing less additions to homes, indicating that homeowners are looking to use the space they have more innovatively. This trend bodes well for multifamily, where space, usually in urban areas, is at a premium and smart usage of space is a necessity.
Shigley added that multi-generational living is increasing in popularity, whether it be parents moving in with their children or job-seeking Millennials staying at home longer. He said that many parents look to gain equity from selling their house, and recent trends have proven that Baby Boomers in search of a more flexible lifestyle have turned to renting in order to experience new places or move to be close to children or grandchildren. In multifamily communities, this phenomenon can be addressed by adding mother-in-law suites or furnished basements to townhomes or condos, or by creating guest spaces in the form of a loft or spare room in smaller apartments.
Joseph Irons, of Irons Brothers construction in the Seattle area, said, “Pacific Northwest consumers are tech-savvy and community-minded.” He noted that the community-minded spirit of the Pacific Northwest translates to a desire for more entertaining-friendly spaces, which means larger open kitchen designs and outdoor living amenities. Fire pits, patios, grills or outdoor kitchens could be effective add-ons to foster a sense of community at a multifamily property.
“Remodeling activity has experienced strong growth over the past three years,” said Paul Emrath, NAHB vice president of surveys and housing policy, adding that he expects the pace of growth to moderate. The desire for tailoring a living space to suit an individual renter or family still exists, however, and customization can still be achieved in multifamily properties with a few small tweaks. Tech amenities, like smart controls, can allow renters to manage everything from the temperature of their unit to virtual entry with a smart lock. Devices like the Samsung SmartThings Hub or the Wink Hub allow integration with renters’ existing technology, like Amazon Echo or Nest, in order to control lights, air vents, switches, outlets and more. Installing USB-enabled outlet switches is another simple and inexpensive upgrade that can make renters feel like their unit is customized to their lifestyle and needs. By taking a few cues from the remodeling industry, multifamily property owners can customize their properties to suit the needs of today’s dynamic households.
Photo courtesy of NAHB