Trends and Opportunities in the U.S. Basement Remodeling Market

Trends and Opportunities in the U.S. Basement Remodeling Market

The basement remodeling market grew 2007-2008 despite slowing economy and housing downturn. And, this niche market segment is projected to continue growing.

Basement remodeling projects face particular challenges - each identified and explored in depth in this new report from SBI. Innovative new products are sparking new trends in this traditional remodel arena.

Trends and Opportunities in the U.S. Basement Remodeling Market provides a comprehensive examination of basement finishing trends in the United States as related to uses, challenges, expenditures, customer base and preferences, and the vendors and products that serve this market.

It examines the composition and strength of the market by looking at the many components that are indicators of its potential size and activity. These components include, but are not limited to, the number of existing homes that have basements, the aging of existing housing stock, home improvement expenditures, homeowner remodeling trends and the average cost of a basement remodel job.

On the basis of these and other data, SBI estimates the size of this market from 2005 to 2007 and forecasts growth from 2008 through 2012 (Chapter 2). In addition, this report discusses in detail major factors that help to explain recent growth patterns as well as those expected to affect the growth or decline of the market through 2012 (Chapter 3).

In the ever-greening climate of thinking, the fact that finishing a basement makes it easier to heat the house in the winter and cool in the summer, which adds up to energy savings, a not insignificant consideration as energy prices escalate. So who are the end users for basement finishing projects and what do they use their upgraded lower levels for? Chapter 7 answers these questions.

Methodology

Report data were obtained from government sources, including the U.S. Department of Commerce, U.S. Census Bureau, U.S. Department of Housing and Urban Development and U.S. Bureau of Economic Analysis; trade associations such as the National Association of Home Builders (NAHB), the National Association of Realtors (NAR) and the Home Improvement Research Institute (HIRI); Harvard University’s Joint Center for Housing Studies (JCHS); interviews with and websites of home improvement contractors, manufacturers and dealers; industry analysts and print and online business and trade journals.

Consumer demographics and spending trends derive from data compiled by Simmons Market Research Bureau, New York, NY. Each year Simmons surveys a large sample of adult consumers about their buying habits. Simmons’ surveys, conducted through mail-in booklet questionnaires, draw on a large and random sample of consumers who represent a statistically accurate cross-section of the U.S. population. The Spring 2008 survey cited in this analysis is based on a sample of 24,581 adults representing 112,843,000 households who completed questionnaires over the October 2007 through June 2008 period.  
 

Chapter 1: Executive Summary

Scope of the Report

Methodology

Composition of the Market

Basements—the Big Picture

Table 1-1: Type of Foundation in 1-Unit Buildings in 2007 (numbers in 000s)

The Aging of the Nation’s Housing Stock

Table 1-2: Number of U.S. Housing Units 50 or More Years Old (numbers in 000s)

Where Are the Basements?—Northeast and Midwest

Table 1-3: Type of Foundation in New One-Family Houses Completed in 2007, by U.S. Region (number of houses in 000s)

Home Improvement Expenditures Track Home Sales

Table 1-4: Total U.S. Home Improvement and Maintenance and Repair Expenditures and Percentage Change, 1998-2008E (in billions of dollars)

Basement Finishing Market Size and Growth

Professionals vs. Do-It-Yourselfers

Average Basement Remodel Cost

Table 1-5: Average Cost of a Basement Remodel Job by a Professional Contractor, 2003-07

Households Remodeling Basements, Attics or Garages Using a Contractor

Table 1-6: Number of Households Remodeling Basements, Attics or Garages with a Contractor, 2003-08

Households Remodeling Basements Using a Contractor

Table 1-7: Percentage of Households That Remodeled Basements, 2005-2007

Table 1-8: Number of Households Remodeling Basements with a Contractor, 2005-07

Professional Basement Finishing Market

Table 1-9: U.S. Professional Basement Finishing Market, 2005-07(in billions of dollars)

U.S. Market Forecast

Table 1-10: Forecast U.S. Professional Basement Finishing Market, 2008E-2012F (in billions of dollars)

Trends Impacting Market Growth

New Home Sales Plummet

Figure 1-1: Annualized U.S. New Single-Family Home Sales by Region, January 1997-July 2007 (in thousands of units)

Existing Home Sales Down to a Lesser Degree

Figure 1-2: Annual U.S. Existing Home Sales by Region, 1997-2007 (in thousands of units)

Regional Housing Conditions Support a Healthy Basement Finishing Market

Table 1-11: Percent of Housing Units Built During or Before 1939, by States with a Higher Percentage Than the Average for All U.S. Housing Units

The State of the Economy

Modest Real GDP Growth of 1.1% Forecast for 2008

Figure 1-3: U.S. Current-Dollar GDP vs. Real GDP, 2002-08E (in trillions of dollars)

Figure 1-4: Percentage Changes in U.S. Current-Dollar GDP, Real GDP and the GDP Price Index, 2002-08E (%)

Experts Predict Downturn in Home Improvements

Table 1-12: Remodeling Market Index (RMI) for Selected Quarters, 2001-2008

SBI More Bullish on Basement Finishing Market

Basement Improvement Challenges

Product Innovations

The Supply Side and Company Profiles

The Buy Side—The End User

Young Families Lead the Charge for Finished Basements

Chapter 2: Market Size and Growth

Methodology

Composition of the Market

Basements—the Big Picture

Table 2-1: Type of Foundation in 1-Unit Buildings in 2007 (numbers in 000s)

Figure 2-1: Type of Foundation in 1-Unit Buildings in 2007 (numbers in 000s)

The Aging of the Nation’s Housing Stock

Table 2-2: Number of U.S. Housing Units 50 or More Years Old (numbers in 000s)

Where Are the Basements?—Northeast and Midwest

Table 2-3: Type of Foundation in New One-Family Houses Completed in 2007, by U.S. Region (number of Houses in 000s)

Home Improvement Expenditures Track Home Sales

Table 2-4: Total U.S. Home Improvement and Maintenance and Repair Expenditures and % Change, 1998-2008E (in billions of dollars)

Table 2-5: U.S. Home Improvement and Maintenance and Repair Expenditures by Type and % of Total, 2003-2008E (in billions of dollars)

Basement Finishing Market Size and Growth

Professionals vs. Do-It-Yourselfers

Average Basement Remodel Cost

Table 2-6: Average Cost of a Basement Remodel Job by a Professional Contractor, 2003-07

Households Remodeling Basements, Attics or Garages Using a Contractor

Table 2-7: Number of Households Remodeling Basements, Attics or Garages with a Contractor, 2003-07

Households Remodeling Basements Using a Contractor

Table 2-8: Number of Households Remodeling Basements with a Contractor, 2005-07

Spring 2008 Numbers Confirm Trend

Professional Basement Finishing Market

Table 2-9: U.S. Professional Basement Finishing Market, 2005-07 (in billions of dollars)

Figure 2-2: U.S. Professional Basement Finishing Market, 2005-07 (in billions of dollars)

Conservative Estimate of the Overall Basement Finishing Market

Table 2-10: Percentage of Homeowners Working Independently (DIY) on Remodeling Projects, 2005-2007

Table 2-11: Percentage of Homeowners Planning to Hire A Professional for Remodeling Projects, 2005-2007

Putting Professional and DIY Basement Refinishers Together

U.S. Market Forecast

Table 2-12: Forecast U.S. Professional Basement Finishing Market, 2008E-2012F (in billions of dollars)

Figure 2-3: Forecast U.S. Professional Basement Finishing Market, 2008E-2012F (in billions of dollars)

Chapter 3: Trends Impacting Market Growth

The Housing Market and Its Impact on Residential Improvements

New Home Sales Plummet

Figure 3-1: Annualized U.S. New Single-Family Home Sales by Region, January 1997-July 2007 (in thousands of units)

Existing Home Sales Down to a Lesser Degree

Figure 3-2: Annual U.S. Existing Home Sales by Region, 1997-2007 (in thousands of units)

Regional Housing Conditions Support a Healthy Basement Finishing Market

Table 3-1: Percent of Housing Units Built During or Before 1939, by States with a Higher Percentage Than the Average for All U.S. Housing Units

The State of the Economy

Modest Real GDP Growth of 1.1% Forecast for 2008

Figure 3-3: U.S. Current-Dollar GDP vs. Real GDP, 2002-08 (in trillions of dollars)

Figure 3-4: Percentage Changes in U.S. Current-Dollar GDP, Real GDP and the GDP Price Index, 2002-08E (%)

Home Improvement Suppliers Also Suffer

Experts Predict Downturn in Home Improvements

Table 3-2: Remodeling Market Index (RMI) for Selected Quarters, 2001-2008

SBI More Bullish on Basement Finishing Market

The Universe of Basements

If You Can’t Sell, Remodel

Table 3-3: Basement Remodel Cost and % of Cost Recouped, 2003-07

The Cocooning Effect

Young Family Needs

Product Innovations Make Basement Finishing More Appealing

Suppliers Are Bullish

Chapter 4: Basement Improvement Challenges

Water, Water, Water—the #1 Challenge for Basements

Sources of Moisture and How to Correct Them

Dehumidify or Moisture Will Return

Insulation

Foam-Based Insulation Counters Moisture Conditions

HVAC Requirements

Ventilation

Mechanical Ventilation Top Choice for Basements

Radon—the Disguised Threat

Windows—Let the Light Shine In

Artificial Lighting

Other Considerations with Artificial Lighting

Concealing Ductwork and Wiring

Meeting Code—Check It Out Early in the Planning Stage

Chapter 5: Product Innovations: Fueling Growth in Basement Finishing

Prevention of Water Intrusion

Polymer-Based Waterproofing Membranes: Mar-flex Fusion Grayâ„¢

Cement-Based Waterproofing: Thoroseal® and Thoroseal® Foundation Coating

Exterior Foundation Drainage System: Form-A-Drainâ„¢

Exterior Foundation Drainage System: Mar-flex Drain-A-Wayâ„¢

Interior Foundation Drainage System: WaterGuard

Trench Drain: Multi-Flow

Diverting Roof Runoff: FLEX-Drain®

Sump Pumps: PeakFlow Pumps

Ventilation and Humidity Control

Ventilation: Humidex

Dehumidification: SaniDryâ„¢ Basement Air System

Portable Dehumidification: Danby®

Radon Mitigation

New Construction: Form-A-Drainâ„¢

Retrofitting a Basement: HomeAire

Heating and Air Conditioning

Ductless Heating and Cooling: Comfort Series

Through-the-Wall Heat Pumps: Wallmaster®

Direct Vent Fireplaces: Monessen Hearth Systems

Drywall

DensArmor Plus® 528

Mold Defenseâ„¢

Comfort Guardâ„¢

Insulation

Exterior and Interior Foam Panels: FOAMULAR® and INSULPINK®

Fiber Glass: DryRightâ„¢

Spray-Applied Foam: Heatlok Soy®

Floor Materials

Fiberock® Brand Aqua-Tough™ Underlayment

VersaShield® Underlayment

Endurance Vinyl Plank

Natural Fusion Vinyl Sheet Flooring

Rust-Oleum Basement Floor Coating and Stain

Ceiling Finishes

Ceiling Panels: Luna ClimaPlusâ„¢, Cheyenne, and Astroâ„¢ ClimaPlusâ„¢

Suspension Grid: DONN® Brand AX™

Ceiling Tiles: Metallaireâ„¢

Windows and Doors

Awning Windows: Vinyl by Pella®

Glass Block®

Window Wells: stakWEL® and ScapeWEL

Basement Doors: Ultra Series

Lighting

CFL Downlights by Cooper Lighting

MR 16 and Trac 12 by Juno Lighting Group®

EgressLiteâ„¢

Chapter 6: The Supply Side and Company Profiles

Owens Corning Basement Finishing System

Owens Corning Basement Finishing System—the Product

Franchise Network—the Lifeline of the Business

Cost and Warranty

Installation

Total Basement Finishing (TBF)

The Total Basement Finishing System

TBF Basement Wall System

TBF Basement Floor Finishing

TBF Basement Ceiling Tiles

Basement Window and Enclosure System

Major Competitor

Cost and Warranties

Installation

Impressive Basement Systems

Impressive Basement Systems Wall Panels

Ceiling and Floor Choices

Cost and Warranties

Installation

The Basement Tuxedo

The Basement Tuxedo Wall Panels

Cost and Warranties

Installation

Designer Basements by Temo

Designer Basements Wall Panels

Solid-Panel Surface

Thermal Panel Core

Panel Back with Built-In Microban® Protection

Panel Attachment System

Cost and Warranties

Installation

Chapter 7: The Buy Side—The End User

Demographics Methodology

Young Families Lead the Charge for Finished Basements

Males, Whites and Hispanics Lead in Remodeling

Those with Advanced Degree Most Likely to Remodel

Remodeling Diversity Among Occupational Groups

Higher Income Households More Likely to Remodel

Number of Employed Adults in Household Affects Remodeling Decisions

Basement, Attic and Garage Remodels Top Priority for Homeowners

Mixed Picture on Remodeling by Value of the Residence

Appendix A: Resources for the Basement Finishing Industry: Industry, Trade and Educational Organizations

Appendix B: Resources for the Basement Finishing Industry: U.S. Government Agencies