2020 Second Quarter Market Predictions

Industry trends, predictions, and more!

Since 2008, we’ve sent our Market Predictions Survey to our GuildQuality members to get a better understanding of the state of the residential construction industry. This report contains a summary of the feedback we received regarding Q2 2020. 

In this review, we’ll examine the results indicating how our respondents feel about the current state of the market, how they expect the market and their company performance to change in 2020, what their long and near-term strategies are, which industry trends they believe are rising and waning, and finally, how they feel about qualified labor this quarter.

Current State of the Market

Unsurprisingly, things aren’t looking very positive when it comes to the current state of the market. 58% of our members reported feeling Good or Excellent about today’s market, vs. 87% in Q1 2020. We haven’t seen a number this low since 2012 — i.e. our last recession.

On the flip side, the percent of Poor and Horrible responses increased to 11% (vs. 1.5% in Q1). The percent of Fair responses also increased to 29%, up 15% from Q1 2020.

Overall, these results indicate that the current pandemic is still negatively impacting the industry.

Expected Change in the Market

We also asked respondents to share how they expected the market would change over the quarter. In Q1 2020, prior to the COVID-19 outbreak in the United States, our members had a rather positive outlook. 40% of respondents predicted the market would Improve or Significantly Improve, and only 4% indicated the market would Decline or Significantly Decline. 

Despite the ongoing pandemic, respondents continued to be positive this quarter. 51% predicted that the market would Improve or Significantly Improve, perhaps indicating that the worst is finally behind us. 18% of respondents predicted the market would decline in some way, which is a 4% jump from last quarter. At the end of 2018, however, this percentage was almost identical, even without a pandemic. And finally, for the first time since 2013, less than one-third of our members believed the market would not change at all.

Expected Change in Company Performance

Unfortunately, when it comes to company performance, the overall outlook is a bit more negative. The percent of respondents who selected Improve or Significantly Improve dropped 17% (from 75% to 58%) between Q1 2020 to Q2 2020, while Decline or Significantly Decline responses increased 9% (2% to 11%).

These results may indicate that although our members might be thinking something along the lines of, “Hey, we can only go up from here,” when it comes to the general market, they’re not quite as positive about their own businesses.

Qualified Labor Rating

The ongoing labor shortage has been a significant challenge for businesses in the residential construction industry for some time now, which is why in 2018 we added the Qualified Labor Rating and the Qualified Labor Change Prediction to our Quarterly Market Predictions Report.

Despite the ongoing pandemic, the Qualified Labor Rating is better than it was in Q1 2020. The percentage of Poor and Horrible responses was 27% (down 9%), while the percentage of Good and Excellent responses was 29% (up 3%). This is the first time since we added this question that the percentage of positive responses is larger than the percentage of negative responses. 

Qualified Labor Change

We also asked our Guildmembers, “Relative to the last six months, how has the availability of qualified labor changed?”. 18% reported a positive change (i.e. the availability of qualified labor Improved or Significantly Improved), while 13% reported a negative change (i.e. availability Declined or Significantly Declined). Once again, this is the lowest percentage of negative responses and the highest percentage of positive responses we’ve seen since we started asking this question.

Emerging Trends

We also asked respondents what new or existing trends they saw more of over the last quarter. The three most common emerging trends were:

1. Outdoor living and dining spaces
2. Home offices (not surprising, since many people are still working from home)
3. More color and color mixing

“Customers are willing to mix and match different paint and/or stain colors, especially regarding cabinetry (i.e. the upper cabinets will be white and the lower will be blue).”

Waning Trends

In addition to emerging trends, we asked respondents which trends they saw less of in Q1 2020. According to their answers, here are the trends they believe are on the way out:

1. The color gray (cabinetry, walls, floors, etc.)
2. Unpatterned/plain tile (especially in kitchens and bathrooms)
3. Granite countertops

Near-term Strategies

1. Digitizing/automating everything (meetings, contracts, etc.)
2. Social media marketing (including paid advertising)
3. Increased communication with current and prior customers as well as internal team members

Long-term Strategies

1. Expanding/diversifying product offerings
2. Ongoing leadership and employee training 
3. Recruiting!

Additional Comments

Below are a few additional comments from our respondents that we thought encompassed their overall struggles and successes of working within the residential construction industry.

“Switching to a flexible sales software has been a challenge for my veteran sales team. We meet once a week to discuss issues we’re facing in the field and try to get to the bottom of the solution as a team. In addition, we have an open forum text chain involving key players, allowing them to openly express themselves about the constant changes occuring, as we strive to stay ahead of the curve.”

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“We’re continuing to collaborate with our clients on their current health status or concerns. We’re making that a priority when scheduling all aspects of the project.”