SBI Report: Basement remodeling shows vigor
Looking for a glimmer of hope in the housing market? Look down, specifically at the basement, which is one segment of the remodeling market that is growing, according to a new report.
The Rockville, Md.-based market research firm Specialists in Business Information (SBI) reported that the professional basement finishing market grew at a compound annual rate of 21 percent between 2005 and 2007, from $15.1 billion to $22.2 billion, despite an overall decline in housing sales and home improvement expenditures.
SBI forecasts that the professional basement finishing market will grow 5 percent in 2008 to $23.3 billion and 7 percent through 2012 to $30.6 billion, as the housing market and general economy improve.
The professional basement finishing market, for the purposes of the study, is that portion of remodeling work done by contractors.
While there is typically a correlation between home sales and spending on home improvements, there are exceptions. “While remodeling is down nationally, some markets continue to churn with activity,” said Lonny Rutherford, Remodelers chairman of the National Association of Home Builders. He pointed to basement projects as one of them.
The SBI cited a 2007 report from Remodeling Magazine showing that basement remodeling recoups more than 75 percent of the cost of remodeling on average. Also, finishing a basement costs about 50 percent of the cost to add a room or rooms of comparable space. Finishing a basement also makes it easier to heat the house in the winter and cool in the summer, which adds to energy savings, the SBI said.
While stud and drywall contractors continue to make up the bulk of the basement finishing business, there has been some movement toward systems panels that attach directly to the unfinished basement wall.
“The basement systems finishing industry is in its infancy and has great upside potential,” said Dan Fitzgerald, director of marketing for Seymour, Conn.-based Basement Systems, which entered the systems panels business in 2007.
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James Hardie posts profit
James Hardie Industries, the Netherlands-based manufacturer of fiber cement and construction backboard, reported second-quarter sales of $341.9 million, a 12 percent drop over sales of $390 million in the same period last year. Net profit for the second quarter, which ended Sept. 30, 2008, was $36.2 million, excluding asbestos-related expenses and pay-outs. This figure reflected a 36 percent decline over profits of $49.2 million a year ago.
Earlier this month, the company announced the temporary closing of two production facilities, in Fontana, Calif., and Summerville, S.C., due to continued declines in U.S. housing starts. The market for renovations and repairs has also slowed, the company said in a statement.
Last year, James Hardie agreed to pay $3.3 billion to an asbestos compensation fund over the next 40 years.
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Women willing to spend more on eco-products
Women are more interested in green products than men are (by 57 percent versus 47 percent), according to the latest research results from the NPD Group. And women are willing to pay more for eco-friendly products. On the other hand, more men than women say that they are well-informed on the topic — which begs the question: Why do men say they know more but care less?
“While men may be well-informed and have less interest in the category than women, the question to ask is why,” said Mark Delaney, director of NPD Group’s home division, in a press release. “Is it the fact they are well-informed that is making them less interested, or is it a case where they don’t know what they don’t know?”
But while the gender differences are significant, general interest in green products — across demographic boundaries — is high. More than half of those surveyed think of themselves as extremely or very interested in green products. Recycled product use is high, at 65 percent, and about the same portion of those surveyed say they use CFL bulbs.
Another key finding in “Green 2008: Consumer Attitudes and Behaviors:” Green shoppers want energy-efficient items that save money. That suggests energy efficiency may be an easier sell than protecting the environment.
As part of its report on green, the NPD Group identified the top five environmentally friendly products consumers are currently using. They are: • Recycled products (65 percent); • CFL bulbs (64 percent); • Energy Star appliances (60 percent); • Rechargeable batteries (50 percent); and • Organic soap, detergent or household cleaners (26 percent).
The research also identified five top environmentally friendly products that consumers plan to use in the future: • Hybrid automobile (35 percent); • Recycled products (19 percent); • Organic soap, detergent or household cleaners (18 percent); • Energy Star appliances (16 percent); and • Organic beauty or cosmetic supplies (15 percent).