Amid the shuttering of many brick-and-mortar stores and slow growth in retail spending overall, there is one bright star: home improvement stores. Emblematic of this is the continued strong growth in revenue at Home Depot and other stores in the home improvement sector.
More to the point: Home improvement spending nationwide has been growing at almost double the rate of the rest of the retail sector. Let’s look at what tailwinds have been propelling home improvement, from do-it-yourself work to the hiring of pros to do elaborate remodels.
- One enabling factor is the growth of home values. Total homeowner equity has nearly doubled in the past five years, which has allowed people who owned their own home to feel richer and more disposed toward putting money toward improving their homes.
- Another factor is the age of the nation’s housing (almost 40 years of age on average, in spite of all the new stock built during the boom). Approximately 80% of the nation’s 137 million homes are now at least 20 years old and 40% are at least 50 years old.
- A third driver is the wave of Millennials who are now finally buying homes, often older homes that need more repairs. Research conducted at HomeAdvisor while I was there showed that the Millennials are doing a greater number of home improvement projects each year than any other age group. This demographic juggernaut is going to drive billions of dollars of home improvement in the coming years as more Millennials become homeowners and as their incomes and their home equity rise.
Move Or Improve? That Is The Question
In more cases than one might guess, a remodel can replace a move. The number one reason for wanting to move and buy a different home is not to be “close to a job” or to get into a “good school district”; rather, the most common reason for moving is stated as being “tired of my existing home.” This complaint can sometimes be addressed with a remodel. In this current housing shortage, many people are deciding to renovate the home they have instead of moving. This has provided yet another driver for rapid growth in this sector.
Not only are homeowners doing more remodeling projects, but they are also taking on more large, discretionary (“lifestyle”) home improvement projects, as opposed to just sticking to necessary maintenance. Per-household consumer spending on home improvement, as measured by HomeAdvisor, has risen 17% in the past twelve months, according to a 2019 report, and a significant part of that increase results from an increase in discretionary “want-to-have” projects