Kitchen & Bath Design News

JAN 2019

Kitchen & Bath Design News is the industry's leading business, design and product resource for the kitchen and bath trade.

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when it comes to homeownership rates and remodeling activity. Today's kitchen and bath design market is, therefore, one where the mix of projects skews toward those wanted and needed by well-heeled baby boomers. But millennials are slow- ly becoming a factor in the high-end kitchen and bath market, starting with more activity in the low- to mid-ranges. "Half of the spending in the country is households 55 or older, so it is a big segment and a growing segment of the mar- ket," says Harvard's Baker. "And we haven't quite gotten the millennials kicked into gear yet in terms of buying homes and spending on projects. So, the profile of the typical remodeling client has gotten a little bit older recently and they are asking what they can do to make their homes more comfortable given that they will be there another 10 or 15 years. Those projects tend to be focused on kitchens and baths." Demographics and migration patterns are impacting hous- ing markets in various regions of the country in different ways, says NAHB's Dietz. The mountain states of Utah, Idaho and Montana are seeing population and job growth outpacing even hot markets like Nashville and Dallas. Housing affordability in these locations and other "secondary" markets throughout the south are receiving new residents who are moving away from high-cost areas on the east and west coasts. "The reason why those areas are seeing population and job growth is due to the fact that Los Angeles, San Francisco, Portland and Seattle are relatively unaffordable, particularly for younger households," explains Dietz. "In addition, the South is where you are seeing a lot of younger household growth – Texas, Florida, the Carolinas, Georgia." ▪ boomers and mature buyers looking to remodel with a goal of aging in place. Monique St Laurent, WS Dennison Inc. in Pembroke, NH, notes, "Right now I see the real estate market as leveling off a bit, and I predict that when that happens and the market drops, our younger generation will get in on buying houses. I have four children in their twenties and the three oldest are all watching the market to buy a home. Perhaps the shift will start toward a new demographic and the design trends will shift as well. The challenge will be for those who have been in the industry for a while to be able to adapt to that market change." Meanwhile, in her Scottsdale, AZ market, Annette Kenner of Donna Decker Design says, "Our biggest growth opportunities are with the people between 60 and 90. They are active but facing some restraints on movement, and want- ing to stay with it!" And, for long-time industry pro Donna Ralston-Latham, DRL*Total Environ- ments in Alexandria, VA, changing demographics present both a challenge and an opportunity. She explains, "My challenge is to connect to younger clients and ones who value good design and services. Many of my clients from the last 52 years, as you may expect, have passed away or moved to assisted living situations that do not permit renovations. I have so much to develop and share in the last few years of working in the profession." When it comes to economic projections, what's happening in any given re- gion of the country plays into the equation, as well. For instance, Jim Eathorne of E.W. Kitchens in Wixom, MI explains, "Our business model serves Metro Detroit geographically, and targets households with income levels exceed- ing $150K annually. [But] with General Motors looking to cut 20% of their white-collar workforce and a significant number of those living in our market, I am concerned with my growth possibilities." Raymond Cintron, Direct Renovations in Tampa, FL, notes, "The movement of people to the Tampa/St. Pete area is the biggest growth for us here – and that means people will be buying homes they will want to remodel." CHALLENGES AHEAD While dealers and designers surveyed report being largely positive about the market, they do foresee some significant challenges in the new year. Mark Redman of Lightpoint Cabinetry in Williamsburg, VA says he expects business in 2019 to surpass 2018, but adds, "The biggest challenge [I see ahead] is the lack of quality workers being seen from the supply and install side, which is making things less productive." Kenneth Henry, CKD, CBD of St. Louis, MO-based Glen Alspaugh Co. LLP cites "labor shortage and price increases on materials due to inflation and tariff effects" as concerns for 2019. Stephenson, too, sees labor shortages as a challenge, but notes that she has a plan to address this. "I have a great system in place with all of my subs so that we stay on schedule and budget throughout the year. We are always look- ing for new talent to train, though. I am truly excited about 2019 and looking forward to what the year brings." Christine FitzPatrick of the Larchmont, NY-based FitzPatrick Design Inc. cites the plywood tariff as a concern, saying, "Ninety-five percent of our clients currently upgrade to plywood box construction on their cabinet boxes." Yet despite this, she says she is optimistic about cabinet sales increasing for 2019. Christopher Byrne of Weymouth, MA-based Stone Design is also worried about the tariffs, noting, "Being in the stone and cabinet business, I see major hikes in the cost [of these materials] due to the tariffs that have already gone into effect." By contrast, Joanna Decker of Granite and Marble Creations in Soddy Daisy, TN sees the tariffs as a plus. She explains, "With the new tariffs being put in place and quartz prices rising, I think that granite will become more popular once again since it will be the more economical and budget-friendly choice for a lot of consumers. Overall, I feel very optimistic about business as we go into 2019." While there's no question that dealers and designers will be facing some new challenges in 2019, the overarching sentiment seems to be one of opti- mism going into the New Year and beyond. —Janice Costa January 2019 • 41 40% 30% 20% 10% 0% 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65+ 20-24 Mobility decline is sharpest among young adults, but can be seen across all age groups. Notes: Person-level data for persons 1+ years old. Excludes group quarters and imputed values from 1996-2017. Source: JCHS tabulations of U.S. Census Bureau, current population surveys. Share of People Who Moved Last Year (Percent) ■ 1996 ■ 2006 ■ 2016

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