Welcome to the first episode of The Construction Cut! This week, Taylor dives into the latest on all things construction, home building, and remodeling. Topics include:
- The latest on the trade war between US and China, and why construction companies can breath a little easier this week
- Which project(s) are giving homeowners the best ROI in 2020
- Why construction and architecture companies are feeling optimistic about the new year
- The story of a renovation company who swindled nearly $400,000 from homeowners and then refused to work on their homes
Listen to the entire episode below on SoundCloud. Click here to subscribe to The Construction Cut on Apple Podcasts.
Full Episode Transcription
Note: this podcast was transcribed automatically and may contain minor grammatical errors and missed words.
Spencer Powell 0:10
Welcome back to builder funnel radio, you're listening to the construction cut with Taylor Rennick. Here you'll get the latest news and construction in 15 minutes or less. Let's dive into the show.
Taylor Rennick 0:23
Hey everyone, and welcome to the construction cut. I'm your host Taylor and I am so excited to be bringing you the latest news from the construction world. I've been with builder funnel for three years now working as a digital marketing strategist for custom home builders and remodelers. So I'm excited to share the news with you each week.
The goal here is to keep you informed about the things that have an impact on you, your employees, your company and your clients. And if I can make you laugh, even better, so it is Monday, January 20 2020. Let's dive in.
Let's start with some good news. Some of you may have listened to the builder funnel Radio Podcast, Spencer and I recorded a few weeks back, where we chatted about tariffs and how they are disproportionately affecting the remodeling industry. If you haven't listened to it, I recommend you go back and take a lesson because it provides a lot of context and some really good information about tariffs. What it means, what it means when you hear the word tariffs on the news, what it means to our relationship with China, and all that fun stuff. So as you guys might know, we got into a bit of a trade war with China, which put insane tariffs which are basically an added tax on things like aluminum, steel, iron, copper, basically everything you need to build and or remodel a house. Awesome. So we put tariffs on China. And in return, they put tariffs on us. Now we get a ton of stuff from China. If you look around the room you're in right now, probably 75% of it came from China. So this was a pretty big deal. These tariffs they've been going on for three years now. And it's hit a lot of construction related businesses right in the Pocket Books.
But, we finally got some good news. So last Wednesday, both the US and China signed phase one of their new 86 page trade agreement that is a lot of pages. The new documents stipulates that China will purchase an additional $200 billion of us goods, things like wheat and cotton. China also agreed to stronger protections for us intellectual property, which is super important but a topic for another time. So in return for those concessions from China, the US will cut our territory For over 120 billion dollars in Chinese goods, which is good for everyone, whether you own a remodeling company or a home building company or not. But while this is great news, it doesn't quite get us back to 2016 levels and it doesn't solve everything. But it really is a great step and de escalating trade tensions between the US and China. This is probably a topic that's going to come up over the next year. So it's a huge issue and we're going to stay on top of that for you. Moving on. I've also got some good news for all you home builders out there. Smaller mortgage rates are giving homebuyers more purchasing power and we love purchasing power. So according to Freddie Mac 30 year fixed rate mortgages are getting closer to 3.65%. Having declined since this time last year. Lower mortgage rates help boost the economy since the homeowners disposable income Go to things other than finance costs and other mortgage related expenditures. Sam Katter Freddie Mac's chief economist says, "By all accounts mortgage rates remain low and along with the strong job market are feeling the consumer driven economy by boosting purchasing power, which will certainly support housing market activity in the coming months."
The 2020 cost versus value report came out last week. The report by remodeling provides cost for nearly two dozen home improvement projects in over 20 markets. This is a great resource for consumers and industry professionals alike. remodeling broke down the key takeaways from the report over on their website and there are a few interesting things that I wanted to point out. So major remodeling projects are predictably going to cost a little more in 2020. But and this is the really interesting thing. The perceived value of those Major remodeling projects was down across the board and most markets. So what's going on there exactly?
While remodeling as an industry is continuing to grow, and we'll touch on that in the next story, it's growing a little slower than it has in years past. The folks over at remodeling have attributed this perceived lack of value to what they call consumer jitters. So homebuyers are feeling a little uneasy. As news of trade wars, economic growth and other global conflicts continue to dominate the news cycle. While our economy is strong. There are few indicators that it could be leveling off in 2021 which understandably creates some anxiety for consumers who are replanting, to remodel their current home or purchase a new home in the new year. remodeling also pointed out their biggest higher return project in 2020. And I'm not sure if this is a big surprise or not. But nine out of the top 10 best projects for ROI are exterior replacement projects, things like siding, window replacements and garage doors. So if anyone ever tries to tell you that curb appeal is dead, it's certainly not. It's a big year for the old garage door. They've slid into the number one spot for the project with the best ROI so if anyone ever asks you that now you've got that answer ready to roll. Despite homebuyer anxiety over ROI in 2020, the design builder modeling industry is looking strong in q1.
According to Houzz's principal economist which is a job I didn't even know exists, quote, small businesses in the construction sector, architects sector and the design sector are heading into 2020 on a positive note, with expectations in line with last year, saying that project backlogs are already a few days longer than they were three months ago. So that's great news. She goes on to say that given the significant lays in 2019 due to weather, among other factors, businesses are optimistic about projects spilling over into the first half of 2020. She goes on to say that economic and political uncertainty high product and material costs and shortages of skilled labor continue to be the top side concerns for 2020. So higher material costs. How does that sound familiar? We can loop that back around to those tariffs. I love it when things come together so easily. Let's turn our attention to construction for a minute. It turns out that a lot of Americans don't quite understand how physically demanding construction jobs are. Craft jack, a service that matches homeowners with contractors ask nearly 2000 folks, hey, what's the hardest physical project? What's the hardest project to do with the human body and the results were interesting. They said that roofing and demolition were at the top of their list. Nearly 20% of all folks that responded said that those two jobs in particular seemed more physically demanding than others. They also cited things like carpentry, drywall and installation. On the contractor side, since they asked contractors as well, the contractors thought that carpentry, drywall and installation were more physically demanding than some of the other trades. Now, I've never personally demolished anything before but it does sound incredibly tiring. So who am I to disagree? Alright, so moving on. This next story is a great reminder not to pay for your psychic readings with your customers cash. I'm sure some of you knew that already. But anyway, a home remodeling company in Indiana is being ordered to pay a whopping $1.3 million for taking their clients money and failing it to complete their renovation as promised
Green Frog restoration took nearly 400 grand from homeowners and then never started or didn't even bother to finish their project. Indiana's attorney General secure this judgment against the owners of that company who are both no longer permitted to Own Operate or manage any home improvement business in Indiana. Go figure. But the big question, what did they do with all of that cash? Well, they bought a BMW classic. They also charged psychic readings, shopped online and paid for legal costs from two other criminal charges in Ohio and Kentucky. Goodness gracious for those of you in Indiana, maybe don't do business with those guys. All right. Well, that's it for our first show. If you have any questions about any of the topics I've covered above are how they affect your business. Feel free to drop me a line on the builder funnel Instagram on LinkedIn. On the builder funnel Facebook page, I am happy to try and answer any questions that you guys may have. But I'd love to hear more about how these topics are affecting you and your business out in the real world. What I'll also do is include a link in the show notes to the construction cut newsletter. The goal with this guy is to send out a newsletter each week with the latest news and info you might have missed from the week prior. Now if you're heading to IBS in Vegas this week, make sure you say hi to Spencer. He'll be around to catch up on all things construction. And who knows if you stop and say hey, you might end up on builder funnel TV. I'm so excited to get this show off the ground and I can't wait to see you guys next Monday.
Spencer Powell 10:46
Thank you so much for listening to the construction cut on builder funnel radio. If you got value out of today's episode, please do one of two things for me. share it with a friend by clicking the share button in your podcast player and then texting it or emailing it to them or leave us a review. This is a free podcast. So spreading the word really helps us keep builder funnel radio going.
Thanks guys. We'll see you next time.
Transcribed by https://otter.ai