Footprints Floors: Preparing for Economic Downturn
Yes, a recession seems to be on the way. Or it is already here, depending on who you ask. At Footprints Floors, we are aware that an economic slowdown is coming. And we’re more than prepared for it.
Our market is good, the franchise business model is solid, and we offer outstanding support to our Franchise Owners. We’re digging in for the long haul and are prepared to capitalize when the economy rises again.
Starting with us will set you up for long-term success and financial rewards. That’s because we have an advantage others don’t – experiential knowledge.
Footprints Floors is already twice recession-tested and proven capable of surviving a tough economy that puts other businesses down.
Footprints Floors launched on December 9, 2008 – 9 months after Bear Stearns collapsed.
It was arguably one of the worst months to launch a home improvement business since the Great Depression. Unemployment rates were getting closer to 10%, and Home Foreclosure rates were up 84% in a year!
Yet, Faith-Based Franchise Founder, Bryan Park, went ahead and launched out of an 800-square-foot home with $40,000 in credit card debt after not being paid for six months, with a wife who was 8 ½ months pregnant, a 2-year-old, four dogs, and a cat.
How’s that for an origin story? Those fateful years drove Bryan to establish a business and franchise model to overcome his many challenges in those early years.
In our opinion, Footprints Floors Franchise is the perfect business to invest in during this market. Here’s why.
Recessions Create New Opportunities for the Right Business
A few economists see recessions as a natural economic wildfire. A recession is part of a natural cycle of destruction and recreation that removes unhealthy and unsound businesses, strengthens the ones that remain, and creates room for new growth. It’s when bloated companies, hiding bad financials and coasting off a dated reputation, get cleared out.
Consumers want the best value for their money. They’re more willing to try new brands with better deals and services. They want to spend their dollars wisely and get good quality. It’s the perfect time to thrive for well-run businesses delivering excellent consumer value.
Let’s be clear; you must build a rock-solid business to launch in a recession, make it through, and then come roaring out of it more vital than ever.
That’s what Footprints Founder Bryan Park did.
But not everyone can do what he did. The latest survival data from the Bureau of Labor Statistics shows that a mere 27.9% of businesses launched in 2008 made it to 2022. And the ones that have lasted certainly aren’t all on our level.
So, what’s the difference? We put it down to operating with a formidable business model, in a recession-resilient industry, with a rapidly growing market.
The Home Services Industry is Recession-Resilient
We always prioritize the basics when things get rough or our wallets feel squeezed. And there’s nothing more essential than having a roof over your head.
Home represents a significant life investment and fulfills one of our most fundamental needs. It brings feelings of security, success, and happiness. The typical American homeowner has a high degree of pride in ownership, which includes taking pride in good home maintenance.
And taking care of home always takes on greater importance when things get rough out in the world. This is why the home services industry is exceptionally recession-resilient, if not recession-proof.
Homeowners who want to sell, refinance, or borrow against their home equity all want to get the most significant valuation possible – and the right renovation project can do just that. Those who want to move but can’t afford a new place often choose to improve their current home. Those who plan to stay put for the long-term usually wish to preserve their home and keep things in good repair, while many who are entering the market look for fixer-upper houses with a better price.
A challenging and competitive housing market means sellers go all out to attract buyers and fetch a reasonable price. Home services like staging, paint, and flooring installations are go-to investments. Home renovation, restoration, and repair businesses are known to withstand economic downturns. This even extends to severe crises and housing market crashes.
Homebuilders and new construction tend to suffer as banks tighten their lending, but homeowners adding equity onto their existing homes is virtually always seen as a good investment.
The home service industry even held up to the Great Recession. Historical data shows that demand for home maintenance services remains robust even when home sales are falling. Let’s look into this a little more.
How Home Improvement Has Weathered Past Recessions
We’re not just being optimistic here. Historical data proves this. The 2001 Dot-Com Recession saw owner home improvement spending decline by 4% from its peak to the trough. The tech bubble burst, and 9/11 didn’t have much of an effect on home spending.
So, what about the dreaded 2008 Great Recession? That devastated the residential construction and housing markets.
It was pure carnage. New home builders and construction firms suffered the most. Many were utterly wiped out.
But despite this, the home renovation industry kept ticking along. Yes, there was a sharp initial decline in impact. But home improvement spending made a good comeback and has been steadily rising.
This sector’s strength was seen coming out of the Great Recession. Firms offering niche home renovation services made up 55% of the construction businesses listed on the Inc. 5000 list for 2014.
An Unexpected Pandemic Effect – A Home Improvement Boom
But what about Covid-19? This economic downturn can’t be compared to the Dot Com bubble or 2008’s Great Recession. This time, we have economic anxiety and ongoing health concerns. Many people were reluctant to invite strangers into their homes.
Despite any concerns, COVID-19 has been a boon for home renovations – for both DIY and contracted projects.
Once people were stuck at home with nowhere else to go, they started to look around at their surroundings. If home represents your workplace, gym, recreation center, church, and school, you’re likely to have much higher expectations. And there was plenty of time to get things done.
U.S. Census data from 2020 showed a 22.6% year-over-year sales increase for home centers, hardware stores, garden centers, and building materials suppliers. And that year’s Home Projects Council survey found that home project improvement intent was up from before the pandemic in 2019.
This trend started immediately. A consumer study of 600 homeowners found that 57% completed a home renovation project during March, April, and May 2020. 66.9% of those homeowners cited time at home as the biggest reason for getting a project in.
Extended time at home created a sharp awareness of what could be improved while giving them little reason to put a project off.
And the trend continued. Americans officially had the home renovation bug. One mid-2020 homeowner study found that 76% of homeowners had completed a major project since the pandemic started. And 78% planned to get something done over the next year.
A Statista report confirmed this, finding that 76% of respondents performed at least one home improvement project during 2020 – with 58% of those being interior renovations.
The entire year turned into a veritable renovation fest. By the third quarter of 2020, the Home Improvement Remodeling Market Index (RMI) surged to a robust 82. A score this high indicates strong market confidence in the residential remodeling sector.
Demand was high, with Americans readily coming up with the money to fund their projects. National Association of Home Builders (NAHB) Remodelers Chair Tom Ashley, Jr., CAPS, CGP, GCR, said, “with refinancing activity surging, homeowners are investing in their homes, which is sustaining strong demand for remodeling.”
Home has taken on more importance amid the pandemic and its consequences. It’s now the center stage for our work, life, and recreation.
Harvard University’s Joint Center for Housing Studies (JCHS) thoroughly analyzed 2020’s housing sector and economics. JCHS found that the economy shrank by 3.5% in 2020. At the same time, home improvements and repair spending rose by 3% to almost $420 billion. The companies that did the best were specialty trade contractors and interior projects.
All market segments were represented – low, medium, and high-budget projects. The study concluded by noting that there’s strong demand despite economic uncertainty.
But what about 2021, those supply chain issues, higher prices, and the strained labor market?
2021 rolled around with the average American having started at least two home improvement projects since COVID’s onset.
There were quite a few economic upsets due to supply chain issues, looming inflation, and a strained labor market. However, the home renovation market’s unique driving factors haven’t disappeared. Home projects were still in demand, showing consistent and good spending despite supply chain delays and inflation.
Sure, there were challenges, and the novelty of being at home had worn off. But homeowners still saw the value of investing in their properties.
The Remodeling Market Index for 2021 saw strong demand throughout the entire year. That year, popular projects included home offices and flex spaces, along with a hint of something new.
NAHB chair Steve Cunningham expects those trends to continue and saw a multi-generational renovations trend beginning. This reflects the direction of more adult millennials living in multi-generational home arrangements.
It’s an upcoming trend that’s likely to see more excellent, more upscale finishes throughout a home, intended to cater to adult tastes.
2022’s Outlook and Beyond
Alright, so how are things looking in 2022? Homeowner spending is back on the rise, and the year started beautifully.
Harvard JCHS noted that homeowner improvement and repair spending surged again, with an 11% jump in homeowner expenditures within the first quarter of 2022.
LightStream, an online consumer lender, ran an annual home improvement trends survey and found that home renovation spending is rising from 2021. More homeowners are planning renovation projects and want to get real work done.
LightStream’s research determined that this year’s projects are focused on long-term investments. Homeowners want more functionality and liveable value from their homes. Projects like home additions, basement finishes, and attic renovations are rising.
NAHB’s RMI 2022 first-quarter report came in at a strong score of 86 – showing consistently high spending and the expected growth rates, which translated into healthy market confidence.
But what about inflation? And those rising prices?
Houzz surveyed 67,554 users, finding that homeowners were spending 50% more on home renovations than they did in 2018. A complete 55% of homeowner respondents were planning to renovate in 2022. Those with deeper pockets were spending more as big-budget renovations increased from 60,000 in 2021 to $75,000 in 2022.
Recent homebuyers spent double the national median on home renovations – an average of $30,000 versus $18,000 for all homeowners. This is a significant trend, considering the upcoming demographic advantage.
Interestingly enough, much of this spending has been driven by millennials. In 2020, the Bank of America found that millennials had spent the most on home improvement since the pandemic.
It turns out that many millennial homeowners are living in older homes that need some work done. The bank believes this signifies the beginning of “a wave of renovation activity by a generation that has been relatively slow to enter the housing market.”
And that’s fantastic news for Footprints Floors.
The Upcoming Demographic Advantage – Millennials and Middle-Aged Homes
Millennials have long wanted to enter the market but have been priced out. But they’re finally entering the housing market en masse. And the typical millennial buys an older home in need of repairs. This is due to a couple of factors.
One is that housing inventory is low. We’ll touch on that more in the following section, but to sum it up, wealthier baby boomers are choosing to age in their homes, and home building is low – especially for more affordable, entry-level housing. MarketWatch notes that home builders have focused on the upper-end market post-Great Recession.
The second is that millennials seem to prefer a project simply. Millennial homebuyers have been dubbed “the renovation generation.” HomeAdvisor research found that millennials are highly active renovators who spend more on home improvement than any other demographic.
Its 2020 report calculated that Millennials spent an average of $9,206, whereas all generations spent $8,305. Millennial spending on home improvement services doubled year-over-year, while boomer spending only rose by 20%. In 2019, millennials spent 60% more on home improvement and did 30% more projects.
Home Advisor specifies four reasons for that:
- “Recent homebuying activity and the desire for customization following a move”
- “Buying older homes in need of work closer to city centers.”
- “Buying older homes or homes that need more work due to the rising prices of homes.”
- “Desire for customization and personalized spaces”
Interestingly, many millennials prefer to remain in their homes for extended periods once they become homeowners. Those with growing families choose to remodel their existing homes rather than purchase larger ones.
The trend of millennials buying older homes closer to city centers is supported by Harvard’s JCHS, which projects that America’s largest metropolitan areas will accelerate homeowner renovations during 2022. It tracked 48 major urban areas and found a growth in average annual home improvement spending of 13.8%. Twenty metros are expected to see a growth of 14% or more, while six will see spending growth of 17%.
Pre-pandemic, younger homeowners were already spending heavily on home improvement services. LightStream’s 2020 Home Improvement Trends Study found that 92% of millennials were already planning to renovate in 2020. That was versus 77% of all respondents. The average homeowner was planning to spend $11,473 on renovations (up 27% from the prior year), with millennials planning to spend an average of $13,838.
The JCHS 2019 report noted this shift in demographics. This demographic alone will drive billions in home improvement spending in the coming years as their incomes are rising and they’re finally starting to build home equity.
At least 8.3 million first-time home buyers will enter the home market between 2020 and 2022.
The younger Generation Z also shows a high demand for homeownership. The ones with great jobs or access to family cash are moving into the market.
The home renovation spending demographics are looking good for at least the next ten years. Angi’s Economy of Everything Home 2022 report pointed out that over the next decade, 43.5 million people will turn 30 and transition into family formation and early career growth, 45.2 million people will turn 40 and transition into their peak earning years, and 28.9 million people will turn 80 and begin to renovate to age in place.
And we have the demographics, or rather the statistics, of America’s housing stock in our favor.
Limited, Middle-Aged, and Aging Housing
Now let’s talk about America’s housing supply. The nation’s housing stock is limited and aging. This factor alone is boosting home renovation projects.
JCHS data from 2019 showed that around 80% of America’s then 137 million homes were at least 20 years old. And 40% were at least 50 years old.
Today, the average age of an owner-occupied home is 40 years old. Back in 2005, it was 31. As it turns out, the nation’s median house age has increased since the Great Recession.
Here are a few stats, courtesy of the National Association of Realtors:
- In 2021, the average purchased home was 28 years old
- In 2011, the standard purchased home was 11 years old
- In 2021, 85% of homebuyers bought an existing home while only 15% bought a new home
- In 2003, around 28% of homebuyers purchased new homes
- The housing supply is short 6.8 million units
- 23% of homebuyers compromised on the home’s condition in exchange for affordability, location, and size
Let’s sum it up. America’s homes are old and limited. More homebuyers are going for already-built homes than new builds. Millennials are moving into the market and having to do with what’s available and in their budgets. And the younger the buyer, the older the home.
A nation filled with older homes is a nation filled with renovations and remodeling. So, this is already a boon for the home services industry. It’s no wonder the Remodeling Remarket Index reports high levels of remodeler confidence. The latest data shows remodeler confidence in current market conditions at 83%. (86% were confident in the market for projects under $20,000, 84% were satisfied with projects between $20,000 to $50,000, and 79% were secure in the market for renovation projects above $50,000.)
It’s no wonder the Remodeling Remarket Index reports high levels of remodeler confidence. The latest data shows remodeler confidence in current market conditions at 83%. (86% were confident in the market for projects under $20,000, 84% were satisfied with projects between $20,000 to $50,000, and 79% were confident in the market for renovation projects above $50,000.)
And there’s another factor to consider – the newly middle-aged homes. The NKBA (National Kitchen & Bath Association) notes that houses between 20 and 39 years old are prime remodeling prospects. There was a consistent number of around 22 million American homes in this age range for 6 or 7 years leading up to 2021.
But, we’re now moving into a few years of growth in this segment. This segment is projected to increase to 25.2 million homes in 2025 steadily.
The NKBA estimates that an extra 2.7 million homes in the prime remodeling category can further soften the effects of an economic downturn. These middle-aged homes typically see 15% to 24% more remodels than average.
Time for another mini recap. We have an abundance of old homes with existing, wealthier homeowners choosing to stay in them, and younger homeowners starting to buy in – and eager to renovate. Plus, we’re entering a few years with a rising number of middle-aged homes right in the renovation sweet spot.
But what about the possibility of new homes? Is there a chance that new home builders will swoop in to save the day? Well, home builders already prefer to take their chances on higher-priced builds that millennials and younger buyers can’t afford.
The prospect of an economic downturn makes it even less likely that builders will surge into the affordable housing market at levels enough to put a real dent in things.
Builders are not rushing in to save the day! As it turns out, builder confidence is already down. June 2022 data from the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) shows builder confidence in the newly built single-family home market, making its sixth monthly decline. As always, the entry-level market is more affected by more significant decreases in affordable housing.
Builders are more cautious due to higher mortgage rates softening demand. The housing market is slowing due to high inflation and slower economic growth. So, it does seem likely that the housing stock will remain low.
After all, remember what happened to construction financing during the Great Recession? Banks that survived tightened up on new construction loans or refused to lend, which seriously dampened new home builds to the point of putting many builders out of business.
The new home building market will be further suppressed if that happens again. It’s already happened to some degree.
Housing construction took a direct hit when pandemic restrictions forced builders to shut their work down. The bankers responded early on with more caution and loan scrutiny. The slowdown and tightening in loans are expected to intensify throughout the downturn.
The only thing remaining strong is the sector that made it through the Great Recession – homeowner remodeling and renovations.
You Can Enter the Perfect Niche in a Thriving and Resilient Industry
Did you know that home improvement spending has been the fastest growing retail category?
Yup, back in 2019, when many physical stores were closing, spending in this sector grew at almost double the rate of the rest of the retail industry.
The NAHB analyzed Census data on construction spending, which includes new work and home improvements, and found that overall private residential construction spending was up. May of 2022’s spending was $938.2 billion, a slight 0.2% increase from April. This is a 19% year-over-year increase from 2021.
The NAHB attributes much of this gain to improvement spending. It calculated a $354.9 billion seasonally adjusted rate, which was 34.2% higher than in 2021. The overall trend showed a steady and quick growth rebound from July 2020.
We can’t overstate how well the home improvement industry is doing. This is a strong and resilient market segment, with many factors working in its favor. It’s a $380 billion industry expected to reach $454.6 billion by 2023.
Since the pandemic, flooring spending has been at least an 11% bump. Home Advisor’s 2020 report pinpointed installing new flooring as one of the top three home renovation projects.
Footprints Floors represents a one-of-a-kind home improvement franchise opportunity in this massively successful industry and strange time in history. We provide the only services proven to create home equity – hardwood flooring installations and renovations.
Hardwood flooring Renovations create beauty and boost a home’s value enough to deliver a positive return on investment. That holds excellent sales appeal.
As the number of homebuyers continues to surge, easily outpacing the number of new homes built, more customers are looking for ways to renovate their older homes. Our focus on this niche service gives customers the same pride in owning like-new, beautiful floors.
Footprints Floors appeals to homeowners on multiple levels. Wood floors are great long-term value, reflect classic and universal tastes, and we can install them at cost-conscious prices. We have found that, on average, Footprints Floors can complete a flooring installation for 20% less than other companies.
Let’s dive into those numbers.
Why Footprints Floors is the Right Investment
Footprints Floors is an affordable investment in a turnkey business with low overhead and plenty of support. An investment positions you in the sweet spot of the home services niche.
But why Footprints and not some other flooring franchise? That comes down to our low financial investment and unique franchise business model.
The Footprints Floors Investment
Why don’t we just tell you our total financial investment to get in, train, set up, and start running? It ranges from a low of $78,585 to a max of $113,030 – total!
That’s a far lower financial investment than other mainstream flooring franchises available today.
You don’t have to take our word for it. Here’s how some of our “competitors” stack up.
- The average flooring franchise financial investment is $201,807.
- The most expensive flooring franchise is $819,724.
- Only six flooring franchises have an initial financial investment lower than $151,335.
- Floor Coverings International has a much higher startup cost of $161,400 to $230,100.
And the price isn’t the only thing. Many of these options have Franchise Owners doing the lion’s share of the work, which includes getting locked into real estate leases, dealing with inventory, and hiring multiple employees.
That’s not how Footprints Floors operates.
The Footprints Floors Franchise Business Model
Footprints Floors is a home-based, Christian Franchise – with no real estate, inventory, or hiring overhead. That immediately cuts your risks, initial financial investment, and running costs.
You don’t have to worry about lease complications, monthly rent, or a buildout. There are zero hiring costs or human resource (HR) issues to deal with. There’s no inventory to buy and store or tote around. And all the labor is completed by 10-99 contractors and subcontractors.
Are you starting to feel our difference? And why this wood flooring franchise business opportunity is such an attractive investment even with the current economic climate?
We start our Franchise Owners with an advantage from day one, thanks to our unique business model. The business runs lean, and the margins are incredibly attractive.
Now, here’s how the business runs on a day-to-day basis. Footprints Floors offers world-class support and training that starts before you launch the company and goes the distance with you.
We take care of your marketing and lead generation! We handle your call center and customer support. We even help you schedule appointments! You’re never left alone to make a go of it on your own.
That’s probably why many of our Franchise Owners sign up for second and third territories, and sometimes more!
This flooring company is more like a family business than a typical franchise. Our Founder cares deeply about the success of the company he started and the legacy it’s creating. Bryan’s care extends to every franchise territory and every new Franchise Owner who comes onboard with us.
Will that be you?
Reach out to us now to find out more and begin your discovery journey with Footprints Floors Home Improvement Franchise.