2021 Q4 & Annual Industry Report: Double Digit Floor Heating Growth

2021 was a year marked by plenty of uncertainty but also a variety positives as we saw sustained growth in many sectors of the building and renovation markets. Floor heating was no exception with WarmlyYours sales growth rates hitting double digits year-over-year for the first time in over a decade.

This growth was despite continued uncertainty concerning the COVID-19 pandemic and a housing market that is still impeded by a lack of available inventory which has caused prices to increase exponentially.

Despite these challenging market influences, WarmlyYours was able to post positive sales growth numbers due in no small part to the exceptional performance of floor heating products (nearly across the board).

In this report, we’ll take a closer look at the performance of radiant heating product sales and analyze the impact that the national housing and remodeling markets are expected to have on future sales.

Q4 2021 Sales Performance

The year ended strong with total WarmlyYours US sales up 1.2% when compared to prior-year-period. A huge percentage of the growth during this quarter was actually due in large part to outdoor heating, a product category that includes snow melting, pipe freeze protection, and roof and gutter deicing systems, which was the sales volume leader and had a growth rate of 9.5%.

This is of note because consumer interest for outdoor heating systems, such as snow melting, is highest during Q4 and Q1 because this coincides with winter in much of North America. But sales have usually been highest in Q3 when most snow melting systems are installed. However, this quarter most of the growth came instead from roof and gutter deicing (up 98.6%) and pipe freeze protection systems (up 29.5%).

Towel warmers were also up (6.2%) which contributed a significant amount of sales volume to the overall sales growth in Q4 2021 but the fastest growing product lines were radiant heating panels (up 149.8%) and LED mirrors (up 73.5%). All of these products (towel warmers, radiant heating panels, and LED mirrors) are popular options for ecommerce which is likely why there was a large fourth quarter uptick in e-tailer sales (up 9.7%) and Amazon (up 18.1%).

This increase in ecommerce sales has certainly played a part in the Q4 increase for homeowner sales (up 9.3%). In turn, this increase for homeowner sales has helped propel our SmartServices “product” category with 43.4% growth from last year. These SmartServices include an installation service (SmartInstall), an install supervision service (SmartGuide), a measuring service (SmartFit) and a troubleshooting and repair service (SmartFix).

SmartServices were launched in mid-2020 as a way to help both homeowners and industry professionals with the specialized knowledge base that WarmlyYours has been developing for nearly 23 years since the company was founded in 1999. Along with the launch of WarmlyYours’s installer certification program, these SmartServices have helped grow sales among both professional and homeowner clients. So far, the most popular service has been SmartInstall which made up roughly 58.5% of all SmartService sales in 2021.

Floor Heating Sales Growth During 2021

During 2021, the fastest growing product line for floor heating was the Environ Flex Roll (up 37.9%), which is a product that is commonly used with floating floors. This was followed closely by the TempZone Easy Mat (up 30.2%) that is used for spot heating (providing heating only to high traffic areas to help cut down on operating and product costs while maintaining comfort levels). However, out of the fastest growing floor heating products, the sales volume leaders were the TempZone Flex Roll (up 7.7%) and the TempZone Cable (up 11.8%). These products have historically been our most commonly used heating systems, particularly for tile (the most frequently heated floor covering).

These products helped to drive year-over-year growth in WarmlyYours floor heating sales to hit their highest levels in well over a decade. The consolidated 12.6% growth rate is the first time that WarmlyYours has posted double digit increases in this metric since the recovery from the Great Recession in the early 2010s. The volume leader for sales growth was the US (up 11.8%) but Canada had a faster growth rate at 15.8%.

Julia Billen, owner and president of WarmlyYours, said that a part of this massive upswing in floor heating sales can be attributed to a shift in the way that consumers are viewing radiant heat.

“Historically floor heating was thought of as essentially just a luxury. But that’s starting to shift a bit, particularly because of COVID. People are really starting to consider their homes as a refuge from an uncertain world, as a retreat, as a sanctuary,” said Billen. “The evenness and tranquility of floor heating really lends itself well to creating this sense of warmth and comfort.”  

During 2021, WarmlyYours did see significant growth for the homeowner customer segment, which was up 24.4%. A significant number of these customers were new to floor heating. First time floor heating customers that were also homeowners grew 10.5% in 2021 vs 2020. Homeowners also led volume sales growth but it was closely followed by the trade customer segment (up 5.2%). Additionally, WarmlyYours saw growth for both e-tailers (up 22.4%) and dealers (up 3.3%).

In addition to people seeking to add comfort to their homes with floor heating, another significant contributing factor, according to Billen, has been the tension between escalated home buying activity between 2020 and 2021 (sales of existing homes was up 8.5%) and continued lack of surplus inventory, which has resulted in a mad-dash for potential home buyers.

“The lack of available inventory, combined with increased homesales, has made a lot of potential buyers anxious that they’re going to ‘miss out’ which, in turn, means that a lot of purchasers are settling for available properties instead of waiting for their ‘dream homes’ to show up on the market,” said Billen. “This has resulted in increased remodeling activity as these buyers seek to customize their newly acquired properties to bring them closer to their ‘dream home’. This upswing in renovation spending has certainly been a driving force in floor heating sales growth.”  

The idea that new homeowners are extensively remodeling their recent acquisitions is backed up by the growth that WarmlyYours has seen in the rooms selected for floor heating projects. Bathrooms still make up the majority of projects (well over 60% of projects in 2021 with a year-over-year growth rate of 18.3%) but other rooms are growing in popularity. In 2021, the fastest growing room types were bedrooms (up 51.9%), kitchens (up 31.8%), and family rooms (up 26.3%).

Billen said that incorporating floor heating into non-bathroom areas has been a growing trend in recent years.

“Bathroom floor heating will always be popular,” said Billen. “But as more and more people become familiar with the comfort that radiant heating provides, they want to extend that comfort to the areas of their homes where they spend most of their time.”

This trend is further evidenced by increases in floor coverings other than tile, marble, and stone (the most common floor covering paired with radiant heating) which was still up 6.5% in year-over-year sales. The fastest growing floor covering was laminate wood (up 103.8%) followed by vinyl floor coverings like LVT and LVP (up 47.4%), and engineered wood (up 38.8%). Unsurprisingly, these floor coverings are often found in room types like bedrooms and family rooms.  

The National Housing and Remodeling Markets

2021 saw rapid growth in terms of home sales. According to a report from Yahoo! Finance, 6.12 million housing units were sold in 2021. Compared to the previous year, 2021 had an 8.5% increase in home sales. This is the largest year-over-year increase since 2006.

It is important to keep in mind that when comparing 2021 and 2020, you have to consider the massive impact of COVID-19. While the pandemic was never resolved in 2021, the prevalence of vaccines and treatments along with some relaxed lockdown measures allowed more potential homebuyers to get involved in the market.

This is despite a continued lack of available housing inventory. According to Realtor.com, the inventory of homes actively for sale in December 2021 was down 26.8% from December 2020 and down 57.1% from December 2019.

Unfortunately, this glut of buyers and lack of inventory has had a negative impact on home prices. According to the National Association of Home Builders, only 54.2% of new and existing homes sold in Q4 2021 were affordable to families earning the U.S. median income of $79,000. This is the lowest level of affordability since Q1 2012.

There is some good news on the horizon regarding inventory as according to government data, there were 1.6 million homes started in 2021. This represented a 15.6% surge from the previous year and the fastest growth rate since 2006.

Despite this optimistic projection, the most recent Leading Indicator of Remodeling Activity (LIRA), which is a quarterly assessment from the Joint Center for Housing Studies of Harvard University, projects that the current boom in remodeling expenditure will peak in Q3 2022 before evening out to more sustainable levels.

“Strong increases in home sales activity, household incomes, and home equity levels are supporting a faster expansion of the home remodeling market over the coming year,” said Carlos Martín, project director of the Remodeling Futures Program at the Center. “As owners continue to navigate the ups and downs of the pandemic’s trajectory, the focus on home improvements for changing wants and needs remains in sharp relief.”

Abbe Will, associate project director of the Remodeling Futures Program, said there are several factors that could lead to a tempering of renovation spending.

“The rising costs of labor and construction materials, difficulty retaining contractors, and climbing interest rates could discourage owners from undertaking new or larger remodeling projects,” said Will.

Looking forward to 2022

WarmlyYours’s projections about radiant heating sales do fall in line with those put forth by the most recent LIRA, which is to say that we expect to see growth in floor heating sales decelerate to sustainable levels. The effects of the bottleneck created by both the COVID-19 pandemic, which largely pushed 2021 sales numbers into historic growth levels, will become less and less pronounced as time passes.

However, we are confident that floor heating sales will continue to grow as consumer awareness of radiant heating increases from the recent growth in homeowner customers. We also expect to see the trade customer segment continue to grow, particularly because of the expansion of our professional support services and our installer certification program.

Another significant factor that we expect to help increase floor heating sales will be WarmlyYours’s emergence in both European and Asian markets, which will begin initially via Amazon. WarmlyYours will begin with strategic product offerings to focus on building inroads in these new marketplaces before expanding product offerings.

All of these vectors of growth bode well for the future of WarmlyYours in 2022 and beyond.

Sources:

1. ​​https://www.statista.com/statistics/226144/us-existing-home-sales/
2. https://www.qualifiedremodeler.com/housing-affordability-dips-to-decade-long-low
3. https://www.jchs.harvard.edu/press-releases/boom-home-remodeling-may-peak-2022
4. https://finance.yahoo.com/news/existing-home-sales-december-2021-150008238.html
5. https://www.realtor.com/research/december-2021-data/
6. https://www.nar.realtor/newsroom/two-thirds-of-metros-reached-double-digit-price-appreciation-in-fourth-quarter-of-2021
7. https://www.bloomberg.com/news/articles/2022-01-19/u-s-housing-starts-rise-unexpectedly-on-multifamily-building