Robert Reicheck had an OK year last year. The 40-something proprietor of Reicorp Remodeling, a Four Seasons Sunrooms franchise, logged sales of $1.4 million in 2008. All were sunroom sales and all of them happened before August. After that, leads dwindled to nothing. And in 2009? Again, nothing.
"There are no sunrooms to be sold right now," he states. Reicheck says that he is considering reentering the restaurant business where he once flourished.
Jay Deems, a co-owner of Minnesota Rusco, a Minnetonka, Minn., home improvement company selling siding, windows, doors, and kitchens, as well as sunrooms, knows that sunrooms can be sold. Minnesota Rusco, one of the biggest home improvement companies in the Twin Cities, sold eight of them last January. Unfortunately, none of those sales could be financed.
Elsewhere around the country the story is the same. Most companies that carried sunrooms as one among several of the products they sell and install have shifted marketing and sales resources into other areas. At Weather Tight Corp., a $14 million operation in Milwaukee, for instance, where sunrooms were the company's number two product until 2008, sunroom sales last year were off their projected revenue target by more than a million dollars.
Weather Tight refocused its energies on generating window leads to make up the difference. Those companies that were selling sunrooms exclusively have often found other products to sell ? gutter protection, bath liners, and windows are the preferred favorites.
In its boom years, sales of "rooms" moved steadily upward on a seemingly non-stop growth trajectory, with volume estimated at between $2 billion and $3 billion in 2007. Those sales kept going up until 2008, then, for many dealers, they abruptly slowed.
Just how much off their peak sunroom sales are across the country no one seems quite sure of. At least two important suppliers, Branstrator and Admiral, have closed their doors. Manufacturing leaders such as TEMO and Four Seasons are straining to keep production facilities in operation. Some retail companies that exclusively sold sunrooms have disappeared. At the retail level, the key to survival may be product diversity and target marketing. Blame it on three things: financing, the housing market, and the recession.
Sunrooms ? selling for $25,000 and up ? have traditionally been sold on a payment plan. The credit crunch that began in the spring of 2008 seriously hurt the ability of contractors to get customers the loan they need to buy the product. Lending institutions such as Key Bank that offered secured financing (second mortgages) walked away from the home improvement business. Unsecured lenders, who typically offer smaller loans at a higher interest rate, began to follow.
As housing prices diminished so did home equity. "That," says Altoona, Pa., sunroom dealer Dan Green, owner Solarshield, "took a big percentage [of buyers] out of the market." TEMO president Jim Hall agrees: "What used to be our bread and butter ? second mortgages ? is pretty much nonexistent."
Remaining lenders upped the credit ante, often demanding FICO credit scores of 700 or better to gain approval. That cut out lots of homeowners who may have wanted sunrooms. "If they don't have a 750 credit score, they're not going to get done," says Kip Lee, who a year ago closed his Coastal Empire Exteriors, in Savannah, Ga., and became manager of the Four Seasons Sunrooms store there. "And if they don't have equity, they're not going to get done. There is probably one in four or five [sunrooms] that gets bought."
The other factor is demand. Of all the products offered by home improvement companies, sunrooms were the most vulnerable to an economic downturn. People need a new roof, new siding, or new windows. There's no scenario in which a sunroom is a necessity, so home improvement companies have always sold them as a go-ahead-you-deserve-it lifestyle product. With unemployment headed toward double digits and many consumers in belt-tightening mode, it became increasingly difficult to find the homeowner who both wanted a sunroom and could afford to pay for it, with or without credit.
"The middle of the market has dropped out," observes Tom Panek, a Michigan manufacturer and retailer. He estimates that industry sales are a third of what they were in 2007.