Summary

Vinyl siding has lost market share over the past few years.  Many factors account for this but the US economic meltdown is bringing frugality back to homebuying and homeowning.  A higher percentage of smaller, affordable and "greener" homes are expected to be built in the future.  And existing homeowners will seek more cost effective (and recoverable) residing options in the future.  Since vinyl is the cheapest siding option available, it emerges as the odds-on favorite to win more and more siding jobs. 

Analysis

It’s no secret that vinyl siding is the number one siding choice for new US residential construction.  Lesser known is the fact that vinyl has been under attack recently and has actually lost a couple of market share points over the past 2-3 years.  Although the gap between vinyl and its closest competitor, fiber cement, is still significant (about 38% for vinyl vs. 16% for fiber cement) the market share skid is somewhat alarming. 

 

But good news is on the way for vinyl siding players - the prolonged housing industry downturn and the expected long, slow ramp up of home building will trigger several market forces to help stem vinyl’s market share slide and position it for growth against its competitors.  Some of the stimulants of higher market share for vinyl include: 

 - a larger percentage of smaller homes for the foreseeable future,

 - the drive for cost effective solutions for repair and remodel siding projects and,

 - a heavy marketing effort by the Vinyl Siding Institute around the eco-friendly attributes of vinyl. 

 

Smaller homes

When home building returns to normalcy, a higher percentage of smaller, starter homes will be built rather than larger move up or custom homes.  During the peak years of US home building 2003-2005, builders were forced to build larger footprint homes to justify the cost of their ultra-expensive land positions.  Speculative buying egged on builders to drive up land and home costs in a seemingly never ending upward spiral.  Vinyl was often lost in the shuffle as higher priced siding options such as fiber cement, stone and brick were selected to give these homes a richer appearance. 

 

But fiscal logic will return to the home buying masses and if not, the new and improved mortgage industry will get them there.  A larger percentage of the “to-be-constructed” housing inventory will be of the size and cost that can be afforded – after the buyer comes up with a most likely mandatory 20% down payment.  Builders will build homes that people can afford.  And with vinyl being the cheapest new siding option available, well you get the picture.    

 

Cost effective repair and remodeling

Anyone who has resided a house knows that the cost of doing so is significant.  In the past, homeowners tapped their abundant reserves, also known as home equity, to get the job done.  Now, home equity loans are much harder to come by.  Homeowners are forced to think with their wallets, their real money, not the fantasy funds available from a bank high on lending fever, when considering alternatives for residing projects.  And, according to Remodeling Magazine, a vinyl siding replacement job is the lowest cost residing option available and it recoups most of its cost when the home is resold. 

 

The oft-repeated phrase “vinyl is final” has reemerged and lends itself well to the frugality which will reign over major home repair and remodeling projects for years to come.  Vinyl manufacturers are also offering rich, dark colors that previously were only available with latex paint on a wood or fiber cement surface.  Vinyl will come out on top of many residing projects in the near future. 

 

Green Vinyl

Most people scoff at the idea of vinyl siding, made from polyvinyl chloride, as being an environmentally-friendly building material.  But the Vinyl Siding Institute has done their homework and is putting on a promotional campaign to make consumers aware of vinyl’s “green” attributes.  According to the green building standards set by the United States Green Building Council, vinyl meets the requirements of “sustainability” due to its durability and since it requires no additional finishing products (such as paints, caulks or glues), it actually contributes toward obtaining green building “points”. 

 

Vinyl also beats both brick and stucco in a life-cycle analysis (developed by software developer BEES – Building for Environmental and Economic Sustainability “often cited” by the USGBC) that takes into consideration a combination of important environmental criteria including ecological toxicity, global warming human health and ozone depletion among others.  And with the introduction of insulated vinyl siding (vinyl siding with a fused or mechanically attached piece of rigid foam insulation on the back), the product takes on a distinct green hue. 

 

What Next?

Cost concerns from home builders, home buyers, homeowners and lenders and a lack of price competitive alternatives will all combine to stop the market share slide of vinyl.  Fiber cement won’t fade away and neither will regional favorites such brick and stucco.  And there’s a host of new siding products coming to the market that will tease folks looking for home siding options.  But none of them have the market advantages that vinyl has.  Yes, vinyl may have lost a few market share points in the past few years but it is poised for a comeback and vinyl players can’t wait to pounce.    

Analyses are solely the work of the authors and have not been edited or endorsed by GLG.