Feb 9 2011
The North American residential roofing market hit 130 million squares valued at over $9 billion in 2010, a decrease of over 11% in value from 2009 levels.
Much of this drop was due to lower availability of consumer credit, interest rates, employment trends, and shifts in consumer confidence.
Historically, 70 to 75% of demand roofing products demand depended on reroofing programs. However, due to the dramatic 70% decline in new housing starts from the 2005 peak to 2009, reroofing accounted for 82% of demand in 2010. Ironically, since new residential construction is down so dramatically, it is this construction type that will drive future demand growth for roofing through 2012 as it will increase faster than reroofing spending.
Consumers are taking a more active role in roofing product selection when dealing with their contractor. They are better informed than just 10 or 15 years ago making use of store visits (e.g. big box) and the internet to research projects. With tight budgets, but armed with more knowledge, homeowners are making roofing choices based on perceived value. More often the evaluation will involve not only initial costs but expected useful life and annual costs as well as warranty advantages and disadvantages.
At the low end of the roofing price range, the difference between perceived value and functional value is important. For example, the fact that architectural shingles have more dimensional appearance and longer warranties, and with a low installed cost have made them the most popular roofing choice. Homeowners who are not as affected by economic constraints are moving toward roofing products with longer lifetimes such as metal. At the highest end of the price range, consumers seek products that are beautiful and can be rationalized by their low maintenance, long service life and other attributes such as algae and hail resistance, energy efficiency and other ‘green' considerations.
Principia projects the overall residential market is expected to grow in the next few years because of the following reasons.
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Reroofing old houses will remain strong. There is a large stock of older homes that will require reroofing. Roofing projects that were postponed in late 2010 will be picked up in early 2011.
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New construction is expected to revive in the next two to three years – construction of 500,000 new units is underway and annual rates are expected to again be over 1 million new homes in 2012.
Ken Jacobson, a Partner at Principia Partners, says “The fundamental drivers of roofing demand will not change – overall growth is generally dependent on factors beyond suppliers’ control – overall economic conditions and climate will drive reroofing and new construction dictates the remainder of demand. Therefore, the industry needs to develop and upsell additional features and benefits to drive total value up. In addition, each product category has certain issues to address to capture increased share.”
Roofing suppliers and distributors will have to make an effort to make both existing and new products for roofing more environmentally friendly. In particular, issues such as disposal from roof tear offs and use of petrochemical based ingredients such as asphalt are concerns.
Mr. Jacobson continues “All producers are considering promoting longer life cycles with less frequent reroofing as a benefit. In fact, homeowners are staying in their homes longer, based on changes in demographics as well as lower home values, many look at roofing as a longer term investment and will upgrade to such products as metal or composites. Additionally, as homeowners view roofing as a longer term investment and evaluate a combination of appearance, cost and long term durability an increase in such products as slate and wood look asphalt, polymer composites and facsimile metal products such as stone coated or stamped products will increase in use.”
Source: http://www.principiaconsulting.com/