With new and existing home sales continuing to flounder, the rental market is the flooring industry’s land of opportunity. Home ownership rates have now dropped to 65.9% in Q2 of 2011 according to the U.S. Census Bureau, from ownerships levels of 69.2% in 2004. These current home ownership levels were last seen over 12 years ago in the first quarter of 1998.
Multifamily starts are continuing to rise as single-family starts are diminishing. According to the Commerce Department, total housing starts slipped 1.5% in July to a seasonally adjusted annual rate of 604,000 units. Single-family homes tallied 425,000 while multifamily housing starts rose 6.3% to 170,000. The revised July 2011 figures were: 447,000, single family; and 160,000, multifamily. This is definitely a bright spot and an opportunity for you.
Additionally, plans are being considered to turn all those homes now owned by the government into rental properties, according to U.S. Treasury Secretary Timothy Geithner. What an opportunity for you!
Banks also have loads and loads of properties on their books that could be turned into rental units. Reach out to the banks to see if you can go in and do the required flooring replacements in your area. Property management company and apartment owners associations are also a good source of business leads.
Put together some different flooring packages at different price points with the assistance of your distributor and manufacturer partners. This segment will keep your inventory costs low as you include products with local stock sourcing or enrolled in quick-ship programs.
The goal here is to keep your installers busy while the residential remodel business has paused.
Leveling the Flooring Purchase Playing Field
It finally happened…Congress is trying to level the playing field for brick and mortar businesses with the introduction of the Main Street Fairness Act bills in the Senate and House. The World Floor Covering Association has endorsed Senate Bill 1452 (introduced by Dick Durbin, D-IL) and its identical companion legislation by Congressmen John Conyers (D-MI) and Peter Welch (D-VT). The bill addresses the imbalance between out-of-state Internet/mail order companies and local brick and mortar companies when collecting state and local sales taxes. Contact the World Floor Covering Association to voice your opinion.
Carpet and Rug Institute Restructures
In a move to increase efficiency, the Carpet and Rug Institute (CRI) has eliminated all committees. According to John Wells, Interface Americas president and CRI chairman of the board of directors, the structure change became effective Sept. 1.
According to Wells, the changes will increase CRI’s effectiveness and allow for greater efficiency in addressing carpet industry issues. The new plan eliminates committees and issue management teams in favor of multi-functional panels assigned to address each of three main categories: product performance and standards, deselection, and extended producer responsibility and issues involving the Carpet America Recovery Effort (CARE).
Each panel, comprised of member manufacturers representatives with marketing, technical and government relations expertise, will be charged with identifying critical issues facing the carpet industry. When necessary, panel members may vote to form short-term task groups that will deal with target issues quickly and effectively and then disband.
The CRI board also approved the formation of the Strategic Issues Leadership Council, to work between the panels and CRI’s board of directors and the policy committee. Said Wells: “We undertook the reorganization with the expectation that the carpet industry would continue to devote time and resources to dealing effectively with critical issues, and to ensure that our trade association uses those resources as efficiently as possible.”
“Without question, the new organizational structure will make CRI a more focused and effective organization,” added CRI president Werner Braun. Members for the SILC and panels are currently being selected.
The Rental Market: Opportunity Knocks
September 8, 2011