How Higher Interest Rates Impact Home Improvement
Nearly two-thirds of homeowners (65%) see home improvement projects as an alternative to buying a new home, given high interest rates in the housing sector, according to the Craftsman Home Field Advantage Survey.
More than half of Americans are unwilling to put their homes on the market. They’re worried about giving up low-rate mortgages and being forced to take out loans that are much more expensive. Instead, 2 out of 3 homeowners plan to make home improvements in the next six to twelve months.
The primary reasons for a home improvement project are: to create more comfortable living environments (52%), to enhance the aesthetic appeal of their home (50%) and to improve overall home value (47%).
The most popular areas for improvement are consistent with many industry surveys: painting (51%), bathroom improvements (44%) and kitchen improvements (41%).
Budget: More than half of homeowners (54%) surveyed say their approximate budget for their home improvement project is $5,000 or more. More than a third of homeowners overall (37%) and 64% of those who have refinanced in the past three years say their budget is more than $10,000.
Timeline: 3 in 5 homeowners (60%) say they have tried to execute a home improvement project themselves in the last 12 months, while 2 in 3 (66%) say they plan to make home improvements in the next six months to a year.
The lack of the right tools can be a roadblock. More than 2 in 5 homeowners, especially millennials, admit they have given up on a project altogether due to a lack of necessary tools. Almost two-thirds of homeowners surveyed (64%) prefer to buy the tools they need rather than borrow them.
Canada Home Improvement Trends
Two-thirds of homeowners surveyed still plan to renovate despite higher interest rates, according to their fifth annual HomeStars Reno Report. Home-Stars is an online marketplace that connects homeowners with home service professionals.
On average, Canadian homeowners spent $12,300 on renovations in the past 12 months. Seventy-nine percent funded their renovations with cash from savings, while 21% looked for financing or used credit cards.
Motivators: Refreshing a home's look and improving its esthetics and function was by far the most important motivator for renovating (59%) followed by improving outdoor living space (32%).
Top renovation projects: Painting the interior, installing new appliances and renovating bathrooms topped the list of home reno projects. Outdoors, there has been an upward trend in patios and decks, water features and pools since 2022.
Home styles: Modern farmhouse was the No. 1 preferred home style (23%), followed closely by ranch/bungalow homes (22%). Contemporary/modern trailed at 15%.
Fewer Fixer-Uppers. While 15% of homeowners bought or sold a primary property in the last year, just 28% of them bought a fixer upper, down from 44% in 2022.
Multi-generational living is trending, with 25% of respondents expecting to live in a multi-generational household within the next decade.
Sustainability: Seventy-nine per cent of respondents believe sustainability is "important" when choosing building materials for renovations, but just 59% who renovated in the past year used green products.
Weather-related repairs: One-third of homeowners completed emergency repairs due to weather-related events.
Weather-related changes: Fifty-five per cent of homeowners are considering making changes in response to the rise in weather-related events. Tree-trimming tops the list, followed by creating an emergency fund for such events.
Smart home technology: About 66% of Canadians own at least one smart home product, with Ontarians leading the way with 72% owning at least one smart home product. Smart thermostats led the charge with 33 per cent of national respondents having one installed in their homes.
Holiday Sales Recap
US retail sales rose 3.1% between Nov. 1 and Dec. 24, as shoppers looked for last-minute Christmas deals amid big promotions, according to the Mastercard Holiday SpendingPulse report. The increase is lower than the 3.7% growth Mastercard forecast in September and last year's 7.6% rise, but a strong job market kept consumers shopping despite high interest rates.
Analysts believe discounts were not as deep as they were in 2022, when retailers were trying to unload excess inventory accumulated during the pandemic.
Many shoppers took advantage of Black Friday and Cyber Monday, and finished up Christmas shopping on Super Saturday, traditionally the Saturday before Christmas. The weeks between Cyber Monday and Super Saturday were softer than forecast as shoppers waited for the final weekend before Christmas to do their last-minute bargain hunting. It was one of the longest holiday shopping periods, with 31 days from Black Friday through Christmas Eve. In addition, Amazon kicked off the season super-early, with Prime Days in October, and many retailers started Cyber Week deals well before Black Friday.
Ecommerce sales grew 6.3%, a big slowdown from the 10.6% growth recorded in 2022, as the popularity of online shopping came off pandemic highs, according to Spending Pulse.
The National Retail Federation predicted that the final analysis will show that holiday sales rose between 6% and 8% to between $942.6 billion and $960.4 billion from Nov. 1 through Dec. 31. Their numbers exclude spending at car dealers, gas stations and restaurants. Actual results will come out in January.
Amazon Hits Delivery Milestone
Amazon hit a big milestone in December, announcing that a total of 1 billion packages had been delivered from their 55 same-day delivery sites since 2019. Amazon’s logistics network is really put to the test over the holidays. In the last four years Amazon has built at least 55 same-day facilities strategically located in or near metropolitan centers. Roughly 10 have opened over the past year. Logistics consulting firm MWPVL International estimated earlier this year that Amazon could add more than 150 sites over the next several years.
The sites differ from Amazon's traditional fulfillment, sortation and delivery stations by combining elements from each of them. The same-day sites also differ from other delivery stations in another way: Instead of using delivery drivers employed by companies that contract with Amazon, they rely on gig workers using their personal vehicles.
Amazon's pivot to a regionalized operations network was designed with the goal of reducing the number of items flowing through its supply chain. Amazon said that about 76% of products customers ordered in 2023 were delivered from local facilities, compared with 62% in 2022. The approach is also improving shipping speeds, which suffered during the pandemic due to skyrocketing demand and a workforce hit by Covid layoffs. During the pandemic, delivery slowed by two days on average from March to May 2020.
In the first half of 2023 about 60% of shipments were delivered within a day, according to Amazon CEO Andy Jassy.
Prison Sentences for Retail Crime Spree
Two retail thieves are going to federal prison, thanks to a coordinated effort from the FBI, The Home Depot, Lowe’s and local law enforcement. The two young men convicted of stealing hundreds of thousands of dollars worth of high-value merchandise from The Home Depot and Lowe’s were sentenced to more than a year in federal prison because the crime spree covered several states and lasted more than a year. The two targeted Lowe’s and Home Depots and stashed coveted merchandise in plastic bags before smuggling it out of the stores. The FBI noted that this type of crime drives up costs for consumers everywhere. The men pled guilty and admitted to transporting stolen goods across state lines. One of them said “We made a series of terrible mistakes.”
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