Remodeling Spending Up Sharply, Houzz Survey Finds
PALO ALTO, CA — Home renovation spending has grown 15% in the past year, with kitchens remaining the most popular remodeling projects undertaken by U.S. homeowners, according to the tenth annual “Houzz & Home” survey.
The annual survey of more than 70,000 registered users of Houzz found that while median spending on kitchen remodeling has been flat for the past three years, investment on major remodels of kitchens jumped 14% in 2020 compared to the prior year. The survey, fielded this spring, also found that the renovation market will continue to be robust in 2021, with 56% of surveyed homeowners planning to renovate this year, the highest share since 2017.
“While the pandemic caused initial concern for the residential renovation industry, many homeowners finally had the time and financial means to move forward with long-awaited projects in the past year,” said Marine Sargsyan, senior economist for the Palo Alto, CA-based online platform.
“This pent-up demand, along with other long-standing market fundamentals such as accumulated equity, will empower homeowners to continue investing in their current homes rather than face skyrocketing prices in the housing market,” Sargsyan added.
With homeowners largely homebound due to the COVID-19 pandemic, the share who reported that they had wanted to pursue a home renovation and finally had the time increased by 6% in 2020 (44% compared 38% in 2019) and remains the top renovation trigger. Wanting to (remodel) all along and finally having the financial means also rose compared to the prior year, Houzz said, adding that a quarter of surveyed homeowners claimed to have renovated instead of moving because it was the more affordable option.
Other survey findings were as follows:
• While interior room remodels remain the most common projects (68%), outdoor areas have increased in popularity, with 2020 showing a jump of six percentage points (57%) among renovating homeowners.
• While Baby Boomers (ages 55-74) have historically led in both renovation activity and spending, Gen Xers (ages 40-54) narrowed the gap in 2020. Gen Xers now account for 32% of renovating homeowners (up from 30% in 2019), Houzz said. Millennials (ages 25-39) represented 12% of renovating homeowners.
• Homeowners are investing in smaller areas that may once have been considered a luxury but are now considered a necessity, Houzz noted. For example, demand for home office projects jumped four percentage points (14%) in 2020. Median spending on closet upgrades also saw an increase of 43%.
• Smart home technology purchases continue to rise in popularity. A larger share of renovating homeowners purchased smart technology products for their outdoor spaces than the previous year, including security cameras, light fixtures and speakers or sound systems.
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Government Support Seen as ‘Necessary’ to Boost Housing
CAMBRIDGE, MA — As the U.S. economy continues to recover from the impact of the COVID-19 pandemic, households that weathered the public-health crisis without financial distress are snapping up the limited supply of homes for sale, pushing up prices and further excluding less affluent buyers from homeownership. At the same time, millions of people who lost income are behind on housing payments and on the brink of eviction or foreclosure.
Those are among the key findings of The State of the Nation’s Housing 2021, a major new report which concludes that, while government policymakers “have taken bold steps to prop up consumers and the economy, additional government support will be necessary to ensure that all households benefit from the expanding economy.”
The State of the Nation’s Housing 2021 report, released last month by the Harvard Joint Center for Housing Studies, found that even before the pandemic, household growth in the suburbs and small metros was on the rise, and the pandemic helped accelerate that growth, particularly among younger households who were ready to own homes and were looking to work remotely.
In 2020, existing home sales rose 6% and new single-family home sales jumped 20%, putting total home sales at their highest level since 2006, despite historically tight supply. But the combination of robust demand and limited supply lifted home prices to their fastest pace in over a decade.
“These outsized increases have raised concerns that a home price bubble is emerging,” said Daniel McCue, a senior research associate at the Cambridge, MA-based Harvard Joint Center for Housing Studies. “But conditions today are quite different from the early 2000s, particularly in terms of credit availability. The current climb in prices instead reflects strong demand amid tight supply, aided by record-low interest rates.”
“For those households with secure employment and good-quality housing, their homes provided a safe haven from the pandemic,” said Chris Herbert, managing director of the Joint Center. “But for millions struggling to cover the rent or mortgage, their housing situations have become increasingly insecure, and these disparities are likely to persist even as the economy recovers, with many lower-income households slow to regain their financial footing.
“Policymakers must be attuned to the needs of those who have fallen even further behind, ensuring that they also benefit from the expanding economy,” Herbert said.
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Lingering Supply Chain Disruptions Seen as Only Transitory
WASHINGTON, DC — Supply chain disruptions continue to wreak havoc on material prices, product backlogs, freight costs and kitchen/bath project timelines, although current conditions are likely a temporary speed bump rather than a lasting roadblock to future market growth.
That’s the view of most construction market experts, including leading manufacturers, who are forecasting that the current challenges impacting the kitchen and bath product supply chain are transitory rather than permanent, and should dissipate, for the most part, by the same time next year.
Product suppliers – as well as kitchen/bath designers, distributors, home builders, remodelers and others – have been facing a year-long “perfect storm” of surging demand coupled with materials shortages, logistical challenges and global factory shutdowns wrought by the COVID-19 pandemic. Specifically, while remodeling demand is soaring as vaccination rates increase and emerging lifestyles spark reconfigured home layouts, supply-chain disruptions have resulted in acute shortages of critical building products. Supply constraints, at the same time, have caused material costs to soar.
According to the National Association of Home Builders, materials shortages are currently more widespread than at any time since the 1990s, while higher costs coupled with shortages have seen builder confidence in the market decline to its lowest level in a year.
Some 90% of surveyed home builders reported a shortage of plywood, and nearly as many a shortage of windows and doors, according to a recent NAHB survey, which also found that the situation has deteriorated “drastically” since the same time last year. Shortages were also seen impacting a broader-than-ever range of products, including appliances, tile and cabinets, as well as plastic, stainless steel, semiconductors and other components essential to the manufacturing of refrigerators, ovens, dishwashers, microwaves, washers and dryers.
According to the latest Kitchen & Bath Market Index (KBMI), compiled by the National Kitchen & Bath Association and John Burns Real Estate Consulting, supply constraints coupled with rising materials prices and shipping costs are forcing a growing number of kitchen/bath design firms to cope with longer lead times, seek alternative supply sources and increase their prices in an effort to preserve profit margins.
Some 45% of surveyed dealers and designers reported that material shortages and product pricing are affecting project timelines, according to the Q1 2021 KBMI. 60% of surveyed manufacturing firms reported average lead times of six-plus weeks, a significant increase from the previous quarter. 78% of those same manufacturers reported severe capacity constraints – also up from the previous quarter – due to extended lead times on raw materials and significant freight delays. At the same time, 67% of surveyed building and construction firms reported a backlog of three-plus months, with 21% reporting a backlog extending all the way through 2021.
According to Christofer von Nagel, CEO of BSH Home Appliances, the company’s brands – Bosch, Thermador and Gaggenau – “are facing unprecedented consumer demand coupled with global materials shortages and logistical issues that are impacting the supply chain.”
Those factors have caused longer-than-usual delays in delivering appliances (and have made it) “challenging to keep pace with continued high demand,” von Nagel said, adding that fulfillment for some products has recently been four to six months.
“The supply chain is fragile worldwide,” Von Nagel observed. “There are delays no matter where a product is manufactured (and) we expect conditions to be challenging for the foreseeable future.”
“We know this is frustrating for consumers,” Von Nagel added, noting that BSH has hired additional employees, increased production, and constantly monitored and adjusted its supply chain and manufacturing processes.
A growing number of other suppliers have done the same.
For example, in June, Delta Faucet Co. announced a decision to “prioritize production” for certain product brands or finishes, while temporarily pausing production for other collections and finishes. The pause is expected to be in effect until the fourth quarter of 2021, the company said, noting that while it won’t accept new orders during this time, it will fulfill existing orders.
“We estimate that market demand will begin to normalize during the second half of 2021, assuming that consumer spending patterns start to normalize by mid-year,” Electrolux CEO Jonas Samuelson recently told corporate shareholders, adding that capacity and electronic components availability will remain constraining factors into the second half of 2021.
“Because we recognize the situation is not going to change anytime soon, we’re working to be more proactive in alerting our customers to the delays so they can better plan,” Samuelson said. “By this time next year, we anticipate this situation will begin to balance across both demand and the shortages in materials and components needed to assemble the products.”
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Registration Opens for CEDIA In-Person Expo
ALPHARETTA, GA — CEDIA Expo, the platform where technology integrators, designers and construction professionals connect, learn and engage, runs September 1 to 3 at the Indiana Convention Center in Indianapolis, IN. The leading residential technology event brings over 10,000 home technology design and construction attendees together with 300+ exhibitors at one of the first 2021 in-person events supporting the technology sector.
“We’re all eager to connect again on a human level and get back to face-to-face events as we celebrate everything we value as a community together again,” said Emerald Group Vice President, CEDIA Expo & KBIS, Jason McGraw.
CEDIA Expo is committed to making both new and established attendees and exhibitors feel connected and engaged by creating fresh programming, show floor activations, education, and training events in a safe, comfortable environment, show organizers noted.
New exhibiting brands include Environmental Lights, a leader in LED lighting solutions; Hisense, a fast-growing consumer electronics and appliance manufacturer that offers cutting-edge televisions and home appliances, and Datum Project Processing, a new to the market and show exhibitor that is participating in the rebranded Launchpad (formerly Innovation Alley).
Crestron, one of the leading complete, engineered smart home systems companies, is also returning to the main show floor. “We have been thrown into this global experiment,” said Crestron Exec. V.P., Global Marketing Brad Hintze. “We’ve had to innovate as a company, but so have our customers and partners throughout this year. It’s been an amazing experience and we’re excited to be back at CEDIA Expo to share our newest innovations and insights.”
DataComm Electronics, an industry-recognized brand name and a leading manufacturer of home theater and HDMI accessories and data/telecom connectivity solutions, also joins CEDIA this year. “I’m looking forward to the in-person CEDIA event in Indianapolis this year,” said Cassidy Jones, president of DataComm Electronics. “We have some new concepts to introduce, and the products really shine when we can talk about and demo them face-to-face.” Jones continues, “It’ll be nice to catch up with the customers and other exhibitor friends we missed in 2020.”
For registration details, visit https://cediaexpo.com/attend/registration-pricing/
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