Home Remodeling Provides Good News During COVID-19
Without question, the coronavirus pandemic has created tremendous uncertainty in just about every aspect of life, including causing a financial strain on the construction industry as we navigate the unknown. The home renovation/remodeling sector is one of the few that has actually seen an uptick in revenue, however, providing a much-needed bright spot. The obvious reasons are both monetary and psychological: more people are investing in their homes as travel and entertainment spending takes a hiatus and, let’s face it, “home” has taken on greater importance. Many people are living and working at home practically 24/7, confronted daily with all the things they’d like to change or have previously put on hold—whether for their own comfort or for resale value.
By the Numbers
According to a survey by the National Association of REALTORS® (NAR), 77 percent of homeowners say their home renovation budget for 2020 is the same or greater than last year. The top three home renovations that homeowners hoped to complete within their budgets in 2020 are:
1. A new bathroom (28 percent)
2. A new kitchen (23 percent)
3. Fencing in their yards (21 percent)
The survey concludes that there’s been a bit of shift in prospective buyers’ preferences due to the pandemic, which in turn is affecting the type of renovations topping homeowner lists. While kitchen and bath upgrades remain high priorities, the third most popular project for 2020—a fenced-in yard—didn’t even make the top 10 REALTOR® -recommended projects in NAR’s 2019 Remodeling Impact Report, which explored the appeal, value and potential ROI of different types of remodeling projects. Other home remodeling projects that are seeing newfound popularity this year (not surprisingly) are home offices and gyms.
As further proof of the interest in remodeling, home improvement retailer Home Depot reports that its third quarter sales surged as Americans are spending more on home improvement, experiencing a 23.2 percent increase in sales, amounting to $6.3 billion, in the three months ending on Nov. 1, when compared to the same period in 2019. Similarly, Lowe’s reports its sales for the third quarter were $22.3 billion compared to $17.4 billion in the third quarter of 2019, and comparable sales increased 30.1 percent.
Confidence among remodelers is up, too—another indication that more Americans are investing in home remodeling projects as they adapt to the impacts of COVID-19. The National Association of Home Builders’ Remodeling Market Index (RMI) posted a reading of 82 in the third quarter with all components and subcomponents of the RMI at 77 or above, indicating remodelers’ strong confidence in their markets, across all projects sizes. To break it down, the Current Conditions Index averaged to 86, with large remodeling projects ($50,000 or more) yielding a reading of 80, moderately sized remodeling projects (at least $20,000 but less than $50,000) at 86 and small remodeling projects (under $20,000) at 90.
What to Expect
With strong demand comes a few caveats. Remodelers do face some supply-side challenges related to a rise in some material pricing and a decrease in availability, as well as delivery delays (e.g., lumber and appliances), which are affecting project completion times, so remodelers and homeowners alike would do well to take that into consideration when putting together budgets and schedules.
That said, with some forethought, planning and patience, targeted remodeling projects can transform a house into a dream home and an investment into a windfall.