Are we already at the halfway point of 2017? Maybe it’s just me, but it feels more like six minutes than six months. Either way, now is a good time to see if the analysts’ projections for 2017 are holding up.
The National Association of Realtors chief economist Lawrence Yun recently forecasted 5.64 million new-home sales this year, and noted that low supply levels are eroding affordability. “Much of the country for the second straight month saw a pullback in pending sales as the rate of new listings continues to lag the quicker pace of homes coming off the market,” said Yun.
This adjusted forecast of 5.64 million is up 3.5 percent over 2016. Even though this particular adjusted forecast is short of the 6 million to 6.5 million in existing-home sales for 2017 that other analysts predicted at the end of 2016, it is still looking up.
At the end of 2016, The Wall Street Journal estimated that spending on repair and remodeling is expected to clear $300 billion in 2017, besting the previous all-time high of $285 billion in 2007. Too good to be true? Not based on the fresh information from the Joint Center for Housing Studies of Harvard University. The Leading Indicator Of Remodeling Activity (LIRA) released by the Remodeling Futures Program at the Joint Center has annual growth in home-improvement and repair spending at 7.3 percent in Q1 2017, estimated to decline to 6.1 percent by Q1 2018, yet still up over the 5 percent historical growth trend.
We all know that we would rather take dollars to the bank than percentage points; so what does this growth trend mean in dollars? Abbe Will, research analyst in the Remodeling Futures Program at the Joint Center, said, “While the rate of growth is starting to trend down, national remodeling expenditures by homeowners are projected to reach almost $320 billion by early next year.” Good news on this front too. Consumer spending on repair and remodeling, it is still looking up.
As for major appliances, home appliance shipments are up 3.1 percent year over year through Q1 2017, according to the Association of Home Appliance Manufacturers (AHAM). While this snapshot is a bit short of the projection for 2017, some still expect a +4 percent final.
“Comps in the second quarter are harder but July, August, September were soft last year so my gut says that the mid-4s is still the right number,” said John White, chief marketing officer at AVB, North America’s largest buying group for appliances, electronics and home furnishings.
What about the consumer electronics space? “Non-TV electronics, the connected home category, whole-home audio and thanks to a subset of the millennial population who are back into what we know as traditional audio, this business is healthier than is has been in recent years,” said White.
At the end of 2016, when we took a hopeful look ahead to 2017 and enjoyed the picture, we also discussed taking some decisive actions to get in a position to take advantage of these trends. How are you holding up? If you haven’t already, get in gear and get visible.
From now until the end of the year — as we are all acutely aware — are the key promotional periods. Stymied on how to determine, prioritize and allocate an effective marketing budget for your business? Marketing spend, from a net sales perspective of “1.5 to 2 percent, and at least 50 percent of that has to be in digital platforms because this is where you can be more focused, more targeted, and more relevant to the consumer. You can offer better content than in traditional media,” according to White. If you haven’t gotten started, and aren’t sure what to activate first, take White’s advice that the dominant component is still search-engine-based marketing.
As sure as the first half of 2017 has elapsed in a matter of minutes, the second half will be no different. At the half-way point, the projections were largely correct. Things are still looking up.
Leigh Donadieu, senior product line manager at Electrolux Major Appliances, is a member of TWICE’s Women Of Tech advisory board.