Home improvement is gaining share of wallet with clutter-busting features in high demand.
By Robert Isler
During the second annual NKBA Global Connect Summit, NKBA CEO Bill Darcy shared bullish data in his session with Todd Tomalak, Principal at John Burns Real Estate Consulting. In Part 1 of this report, the executives discussed how a robust housing market is expected to lead the economy out of recession.
Expanding on that theme, Darcy noted that home ownership, which now stands at 77 million households, is at its highest level ever — 10 million more than just four years ago. Compared with the same quarter last year, there are 7.5 million additional homeowners, providing a huge pool of potential K&B updates. He added that nearly a third of survey respondents have said the pandemic has changed the way they think about their kitchens and baths, with sanitation, quality of materials, practical functionality and design foremost in their minds.
Tomalak added, “The demand is there, with only supply-chain issues and fear of strangers in their homes holding things up.” He stressed that there is a real opportunity for those in the industry who are able to secure product more quickly and overcome logistical issues.
Tomalak then shared his findings on various market segments. He believes the near-term bounce will be at the entry level, but expects a hot high-end/luxury market in 2021. As he put it, “If there’s one place you want to be, it’s luxury.” He explained that pre-COVID, luxury home sales in high-income markets were stagnant, but have since been eagerly grabbed up as people scramble to leave densely populated cities. He expects those purchases to lead to renovations over the next 18 months.
50% of consumer households will spend more on remodeling due to a wave of unplanned projects, with nearly all of the previously cancelled projects likely to be reinstated at some point.
Tomalak sees the home gaining “share of wallet,” and thinks that trend is fairly permanent. He stated that 50% of consumer households will spend more on remodeling due to a wave of unplanned projects, with nearly all of the previously cancelled projects likely to be reinstated at some point. As for post-COVID changes, Tomalak is less sold on the technology category long-term, but more convinced that kitchen features emphasizing less clutter will be in strong demand. He also believes that as the home becomes more of a base for adults to work and kids to be schooled, the fairly recent trend of breaking down walls for more open spacing will be reversed. As families are locked in their homes, the need for privacy and quiet spaces are taking on more importance.
Tomalak closed by sounding his most optimistic note of all: “We’re not known in the industry as being overly optimistic, but we continue to raise our forecasts because of unbelievably strong numbers. We think it is due to a shift in how consumers are prioritizing the home vs. other goods.”
