The Remodeling Industry Experienced Increased Fragmentation Due To The Great Recession

April 8, 2016

Every five years, the Economic Census measures payroll business activity at the industry level and the Nonemployer Statistics records similar data for businesses with no paid employees. The Joint Center for Housing Studies took the statistics from these reports and isolated the data relating to residential construction businesses, both general and special trade, who have more than half of their receipts from remodeling and repair activity.

From these isolated data sources, the JCHS was able to estimate that the number of residential remodeling contractors increased almost 10 percent to 716,000 by 2012. General remodelers accounted for 263,000 of this total (increasing 12.1 percent from 234,600 in 2007), and special trade remodelers made up 453,000 of the total (growing 8.5 percent from 417,600 in 2007).

It should be noted, however, that the majority of this growth was due to increases in self-employed remodelers. Self-employed special trade remodelers increased by 1 percent from 2007 to 2012 and general remodelers increased by almost 17 percent. During this time period, payroll contractors grew by only 3.5 percent.

With so many additional self-employed remodelers, it means the remodeling industry has become very fragmented, albeit the majority of this fragmentation has occurred at the low end of the revenue spectrum. Despite all of the fragmentation at the lower end, the top 50 largest remodeling companies were actually able to increase their share of industry receipts.

In 2002, the largest 50 remodelers accounted for 5 percent of all industry receipts. By 2007 this number had increased to 7.9 percent and in 2012, the share increased even further to 8.5 percent.

These statistics provide a clearer image of the remodeling industry and how the Great Recession affected it. While there is a definite increase in fragmentation among smaller contractors, the larger-scale firms did not lose any of their concentration gains and have actually increased their share of industry receipts.

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