Why home improvement is always in style
Whatever the calendar says, home improvement projects – including kitchen, patio and basement remodel plans — are in season. For proof, look no further than the busy aisles of the country’s biggest DIY retailers. CNBC reported that rising home sales, high price appreciation and solid job growth have fueled spending at Home Depot and Lowe’s as customers gather tools and materials.
“As prices kind of stay in the low to middle single-digit increases year-over-year, then consumers feel more confident in investing in their homes and are more likely to spend,” Joseph Feldman, a Telsey Advisory Group analyst, told CNBC.
Spending continues apace despite doubt amongst analysts who look at the home renovation market with the same skepticism they reserve for car sales, which is to say, that at some point these amazing numbers have to hit a ceiling.
“Some investors have started to sour on the home improvement sector with the view that we may be approaching the ‘end of the cycle,’ especially in light of softening sales trends in the bigger-ticket categories such as autos and home furnishings,” RBC Capital Markets analyst Scot Ciccarelli told CNBC. “This is not our view. Rather, we believe ‘home-related’ investment spending today is only reaching levels where the industry has historically ‘bottomed out’ during prior downturns/recessions (at approximately 3.5 percent of total GDP).”
A home improvement movement
American’s spending on home remodels continues to stand. According to a recent Bankrate survey, 28 percent of U.S. homeowners aim to remodel, add new rooms or otherwise invest in improvements in the next 12 months.
Millennials in particular were likely to initiate improvement projects, with 37 percent of the 18- to 29-age bracket indicating imminent renovation plans. Homeowners aged 50 to 64 weren’t far behind at 30 percent. Only seniors seemed indifferent or uninterested.
More than half of the respondents to Bankrate’s survey reported that they intended to work on their home exteriors with driveway, deck and patio projects. In line with LightStream’s own survey, bathroom remodels and new roofs and windows were also high on the project priority list.
This nationwide embrace of home improvements can accurately be described as a movement. Bankrate reported that following the housing crisis, when home equity went up in smoke, renovation projects became a luxury beyond the reach of many Americans. Since then, however, the remodeling market has come roaring back. A measure developed by Harvard University’s Joint Center for Housing Studies, the Leading Indicator of Remodeling Activity, has even suggested that spending on home improvements will hit a new record in 2016.