The home improvement industry is nearing a full recovery, according to a recent study by the Joint Center for Housing Studies of Harvard University.
The recovery follows an eight-year, post-housing crisis slump that resulted from the Great Recession. As homeowners tightened their wallets — and as renters avoided the market altogether — home improvement companies and stores suffered a protracted fallout from the housing crisis. However, that trend may be changing.
According to the study, the home improvement industry continues to be driven primarily by members of the Baby Boomer generation, just as it has been for the last 20 years. Recently, there has been a rising interest among Millennials, especially those that are closer to the generation before them in age, in home improvement projects.
Aaron Swafford, of Swafford Services, told Bowling Green Daily News that he’s been keeping busy with requests from both generations.
“Baby boomers might want a bathroom done while the millennials want improvements to the outdoor areas, like outdoor decks,” Swafford said. “I’m real busy and I get to pick and choose the jobs that I want to do.”
Home improvements, especially those on the outside, can have a great impact on the value of the home. Replacing something as simple as old, worn, siding can raise the value of a home by 10%. As a result, many homeowners are investing in home improvement projects to increase the resale value of their homes.
The Harvard report predicts a bright future for the national home improvement industry.
“Homeowner improvement spending should post healthy 2% average annual growth through 2025,” the study noted. “Inflation-adjusted expenditures are expected to increase to $270 billion in 2025.”
However, according to the Harvard report’s authors, there is still a lot of uncertainty in the home improvement market. More Millennials are entering the housing market, but the future of the industry may depend on how many Millennials want to become homeowners in the decade to come.
Michael Mitchell, Lowe’s senior manager of Strategic Insights and Trends, said:
“Millennials, however, have had to cope with more debt, higher home prices, and other generational challenges. While pop culture romanticizes the notion that ‘Millennials never want to own.’ Whether that reality manifests anytime soon, Millennials are not held back by lifestyle, rather it can be simple economics.”
The study authors certainly agree with that sentiment, and they cited “student debt, slow job growth, weak income gains and tight credit markets” as major barriers to greater Millennial home ownership rates.
For now, the Baby Boomer generation will continue to buoy the home improvement market, but the industry’s future now relies on a generation with a historic $1.3 trillion in college loans.