Are your customers telling you the whole truth?
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 Q4 2022.
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 2022, what their long- and near-term strategies are, which industry trends they believe are rising and waning, and finally, how they currently feel about qualified labor.
Current State of the Market
For the fourth straight quarter of 2022, the percentage of members reporting feeling Good or Excellent about today’s market dropped compared to the previous quarter, this quarter falling to 46%. This is the lowest we’ve seen since 2012’s fourth quarter of 44%. While there are concerns about the current state of the market, many members are looking ahead and addressing their concerns head-on with their customers through transparent communication. You can read more about what some members are doing in this market report that we published earlier this year.
The percentage of Poor and Horrible responses increased by seven points from last quarter’s 7%. It’s important to note that while negative sentiment has doubled since last quarter, the percentage of Fair respondents that are middle of the road on the current state of the market has also doubled since Q1 of this year currently sitting at 40%.
Expected Change in the Market
There is a positive trend to report in the expected change in the market. Last quarter, the percentage of members anticipating a decline in the market sat at 54%. This quarter, that number decreased to 52%. This marks the first decrease quarter-over-quarter since Q4 2020 into Q1 2021.
Last quarter, we saw an increase from 8% to 12% in the survey respondents predicting that the market will Improve or Significantly Improve. This quarter, that number split the difference at 10%.
Expected Change in Company Performance
Compared to 17% of respondents last quarter, 22% of our members expect company performance to Decline or Significantly Decline. We’ve seen a steady increase of around 5-6% quarter-over-quarter in 2022.
Last quarter, 38% of respondents expected company performance to Improve or Significantly Improve. This quarter, that number decreased slightly by three points. Additionally, keeping with the trend of 2022, nearly half of the respondents don’t expect a positive or negative change, with 43% of respondents expecting performance to stay the same.
Qualified Labor Rating
The percentage of our members who responded negatively—Poor or Horrible—, when asked about the current state of qualified labor, decreased by 13 percentage points, from 54% down to 41%. It seems the state of qualified labor is improving, as 41% is the lowest number we’ve seen from negative respondents since Q1 2021.
The number of survey respondents who answered that they found qualified labor to be Good or Excellent nearly doubled, increasing to 21%.
Qualified Labor Change
When asked about how the availability of qualified labor has changed over the past six months, we saw a decrease in respondents reporting that it has Declined or Significantly Declined from last quarter’s 27% down to 23%.
Similarly, we saw an increase in respondents that report the pool of qualified labor has Improved or Significantly Improved, from last quarter’s12% to this quarter’s 22%. A hopeful increase in both labor categories, as this is one we’ve seen declining on average for several quarters straight.
When we asked our members about the new or existing trends they saw more of over the last quarter, the top three most common answers were:
- Open-concept and open rooms in living spaces and offices.
- Dark and bold colors for doors, windows, cabinets, and even roofs.
- Across the board, more and more customers are financing, taking more time to make decisions, and generally becoming more concerned about the future.
“Our customers are taking longer to make the decision to improve their homes, as there is uncertainty regarding the economy.”
“Rising interest rates have delayed some clients in the decision making process, but demand remains strong. Accommodating home office space is all the rage.”
We also asked our members about trends they’re seeing less of in 2022. The responses partially echo the emerging trends we are seeing this quarter as well. Here are the top three answers:
- Big ticket items
- Carpet across the board – living rooms, bedrooms, offices, etc.
- White and gray color schemes
“Larger projects have declined due to customer’s cash flow.”
“I think people are over the white and and grey color schemes, because it has saturated the market so much.”
- Increased ad dollars and a focus on re-marketing to past clients for referrals
- Increasing staff numbers and improving training programs
“We’re hiring team members that can handle the load of work in our pipeline, continuing to streamline our process to work for the client best and be most efficient.”
“Doubling down on marketing efforts to generate more leads. Leads are harder to come by.”
- Focusing on customer relationships
- Increasing marketing and social media presence
- Adjust pricing models
“More investment in digital marketing and improved brand development.”
“Focus on being more of a relationship company, not a sales company.”