The home improvement industry has had a steady growth throughout the last five years; its growth is now twice as fast as it was expected and all of this due to the current economical panorama which has stimulated this industry.
Harvard’s joint center for housing studies has calculated a total spent by homeowners of $383.3 billion on home improvements during 2017.
This figure was taking using a biennial index named the American Housing Survey however it doesn’t consider remodels by investors done on unoccupied homes as well as work done for prepping homes for sale since the survey only took in consideration works done by purchasers.
What’s the reason behind the home improvement industry growth?
One of the greatest factors that influence the industry’s growth is Homeowner equity. In the last couple of years Homeowner equity saw an addition of six trillion dollars, and this translated into a stage for homeowners to tackle different issues in their properties.
In 2016 homeowners spent $2,000 more in home improvement projects than in 2015. Some of the most common home improvement projects are:
- Bathroom remodeling $9,275
- Painting home’s exterior: $2,647
- Central A/C installations: $5,250
- Additions: $40,825
- Deck and Porch projects: $6,935
- Patios, walks and steps: $2,443
- Drywall installation: $1,639
- Asphalt paving: $4,169
- Garage construction: $25,008
- Basements makeovers: $18,807
Another trend that is becoming common in home installation projects are smart-home technologies being installed. Most of the people are looking comfort through these technologies while making their houses more energy efficient and modern.
Great parts of those homeowners responsible of making smart-home technologies a trend are Millennials, which are becoming homeowners.
Although Millennials aren’t consider potential buyers there are plenty of them are having high incomes, as another research on homeowners made by Harvard’s joint center for housing studies shows.
That mentioned study states that half of the homeowners in a demographic of under an age of 35 years old had incomes of $80,000 and this doesn’t seem like changing in the near future.
Home improvement industry compared to other industries
While home improvement industry is not as huge as the supermarket industry and automobile industry it does surpass industries like:
- Department stores by a 154% ($150 billion)
- Clothing and accessories stores by a 55% ($250 billion)
- Full-service Restaurants by a 38% ($290 billion)
- Health and Drug Care Stores by a 20% ($300 billion)
Home improvement industry’s growth is expected to exceed new home construction’s in about three years at this phase, due to the current state of the industry and all the factors that are influencing it.
Another aspect that is about to play a role in this industry are the higher mortgage rates that will add spending boost due to the nature of installed home owners who acquired low rates during the ’16 and ’17.
The growth in both Boomer homeowners and high-income millennial homeowners will support this boost in the foreseeable future which will allow the constant expansion of this industry.
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