Guest Column January/February 2023

January 20th, 2023 by Nathan Hobbs

Eyeing the Forecast: There’s a 50/50 Chance of Pane

By Jim Plavecsky

Forecasts are tough. Don’t you just love it when the weather person calls for a 50% chance of rain? How can they miss? On that note, let’s talk about the forecast for doors and windows.

In 2021 and 2022, door and window fabricators saw fantastic growth through a building and remodeling frenzy that was fueled by a pandemic. People abandoned urban dwellings to build outside of the city and others canceled vacation plans in favor of home upgrades. This led to insane levels of demand, but with the pandemic waning, vacation plans resuming and interest rates rising, market trends are getting back to normal. So where do we go from here?

Well, going into 2023, following are three factors to consider.

Number One: Housing

The housing market is not in good shape. According to a recent [DWM] article, November showed signs of life, but overall, the new construction market is down 15.2% year-to-date versus last year. This means that we will see fewer new homes built, which means fewer windows. A recovery cannot happen until interest rates decline and, even then, the effects upon doors and windows will not be immediate but rather will lag behind the leading indicators. Orders for doors and windows come well after the ground is broken on any new starts. If your business is heavily dependent upon this market segment, then consider the next two factors.

Number Two: Multifamily

Multifamily construction will help prop up things a bit. When new housing affordability takes a hit, people flock to apartments. As a result, the multifamily market will help to lift overall new construction. The problem here is that the average selling price for doors and windows tends to be lower with these multifamily projects. However, it sure helps in the overall scheme
of things to have a backlog of orders once again. One thing is for certain—the multifamily business sector can help boost the overall new construction market, so this is something to consider.

Number Three: Repair and Replacement

The repair and replacement (R&R) market will remain steady. It is also affected to some extent by interest rates, but not to the same degree as new construction. There are several reasons for this. If your windows are shot and they need replacement, then you must do what needs to be done by replacing them.

There are also more discretionary remodeling projects which could wait until interest rates subside, but dealers often offer creative financing programs, such as no interest for six months or even a year. This helps to keep the remodeling sector strong even when interest rates are high. In my experience, when the new construction market was off, the R&R segment was our saving grace. Indeed, fabricators that provide a mix of both new construction as well as R&R products tend to enjoy a more stable business platform.

What will it be in 2023? Will it be window “pains” or a steady production of window “panes?”

Jim Plavecsky is owner of Windowtech Sales Inc.
jimplav@gmail.com

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