Remodeling is booming across the country.
Fewer and fewer homes are available for sale forcing more people to rent.
Why is this trend happening and what does it mean for the rental housing industry?
By Todd Tomalak
Homeowners are remodeling rather than moving.
We know this because “big-ticket” remodeling revenue is surging, while homes for sale as a percentage of occupied households has hit an all-time low.
The lack of homes for sale has created more and more demand for rental housing as well as a growing nation of renters for several reasons.
Home builders and resale agents voice frustrations, while remodeling contractors have never been this busy.
Homeowners are on pace to spend more than $215 billion on remodeling this year—$73 billion on big projects (above $5,000 per project) and the remainder on small projects.
Building product companies are experiencing very uneven demand right now:
- Siding vendors have strong sales, as long-time homeowners (we call them nesters)
frequently replace the siding.
- Deck companies benefit less, however, as recent movers tend to put in new decks,
while nesters do not.
The graphic below illustrates the big discrepancies in spending between someone who has recently moved, has been in their home 4–9 years, or has been in the home ten years or longer.
About the Author:
As a Vice President, Todd oversees our building product research and is an expert in building product market assessment and industry analytics. Todd forecasts building products spending, and helps building products companies and investors make strategic decisions. Prior to joining John Burns Real Estate Consulting, Todd served as Manager of Economic & Industry Analytics at Kohler Co, responsible for all North American market modeling and quantitative market research measurement. Todd is the six-time winner of Most Accurate Category Forecaster from Chicago Federal Reserve, which peer group includes Wells Fargo, Caterpillar, Ford, GM, Macroeconomic Advisors, and more. He has his B.A. Mathematics from St Norbert College and an M.B.A. from George Mason University. In his free time, Todd enjoys live music, good food, and is an avid chess player. You can reach him at 920-373-6727.