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

Nov 1, 2008
144 Pages - Pub ID: SB1927314
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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 Gray™
Cement-Based Waterproofing: Thoroseal® and Thoroseal® Foundation Coating
Exterior Foundation Drainage System: Form-A-Drain™
Exterior Foundation Drainage System: Mar-flex Drain-A-Way™
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: SaniDry™ Basement Air System
Portable Dehumidification: Danby®
Radon Mitigation
New Construction: Form-A-Drain™
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 Defense™
Comfort Guard™
Insulation
Exterior and Interior Foam Panels: FOAMULAR® and INSULPINK®
Fiber Glass: DryRight™
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 ClimaPlus™, Cheyenne, and Astro™ ClimaPlus™
Suspension Grid: DONN® Brand AX™
Ceiling Tiles: Metallaire™
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®
EgressLite™

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

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