The past 12+ months have been interesting for our business to say the least. If during this time you haven’t personally either built, remodeled, know someone who works in construction, or know someone who recently had or is having work done on their home, you might not be aware of what has been going on with residential construction and remodeling. For the benefit of those who may be unaware, as well as the generally curious, here is a quick summary of HBRE’s perspective from inside the industry.
In short, demand skyrocketed while supply evaporated. But why? Well, as you might suspect, it was, at least in part, a result of the many impacts of the COVID pandemic, though not entirely.
Demand increased when many people were required to spend far more time in their homes than they had previously. They found themselves using and critiquing the layout, space, features and functionality of their own homes more than ever before. For many, it became a top priority to quickly improve the situation so they could more effectively and comfortably telecommute, home school, gather and, in some cases, just coexist.
When you couple these newly discovered desires to what seemed like a never-ending decrease in interest rates and a historic run in the markets, homeowners quickly considered the idea of using either their growing investments and/or cheap money to jump at the opportunity to remodel – now. Demand surged.
On the supply side, COVID would suddenly, and without warning, shut down or greatly limit every link in the supply chain.
While we are describing these supply-side dynamics as past tense it is important to note that they are not completely in our rearview mirrors and may never fully be. Perhaps at the peak of the industry challenges –2H2020, pre vaccine – the issues were most prevalent, extreme, and surprising. They have not; however, gone away. Homeowners and remodelers, HBRE included, continue to find ourselves on the receiving end of pricier than expected bids, increased product lead-time estimates, and sudden unexpected material availability delays.
On a positive note, we now fully expect the unexpected. Every day brings each of us both new challenges and opportunities. Together, we plan accordingly, appropriately setting and managing the expectations of everyone involved – homeowners, suppliers, subcontractors, ourselves. After all, projects will always be completed as expected when expectations are both reasonable and appropriately set.