Aging homes are fueling a home improvement boom

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The home improvement boom shows few signs of slowing down. Lowe’s told shareholders on Wednesday its same-store sales increased 5% in the fourth quarter. The company also raised its sales forecast for the year to $99 billion. It was after Home Depot reported an 8% increase in same-store sales the day before. A big reason for the growth: an aging building stock.

In 2005, the median age of an owner-occupied home in this country was 31 years. It has since climbed to about 40 years old today. Why?

“Well, the fact that we’re not tearing down and building as quickly as we would like, or as quickly as needed, to meet new demand,” said Grant Farnsworth, chairman of Farnsworth Group, a company home renovation. research firm.

He says years of underconstruction after the housing crash of the mid-2000s have increased the overall age of the housing stock, as well as the demand for home renovations.

“The older the house, the greater the need, the real need, to do projects like [heating, ventilation and air conditioning]windows, efficiency, related projects, roofing,” said Farnsworth.

These types of replacement projects account for about half of home improvement spending, according to Abbe Will, who tracks the industry at Harvard’s Joint Center for Housing Studies.

She projects that home improvement expenses will increase 17% this year nationally, partly due to inflation. The long-term average is around 5%.

“So anything above 5% is strong growth. And then certainly when we’re in the 10%, 15%, 20% range, that’s incredibly strong growth,” she said. Unbearable, even. Will expects growth to peak this year.

Rising mortgage rates could slow home buying. And a lot of home renovations happen right before and right after a sale.

Even so, said Sam Khater, chief economist at Freddie Mac, the shortage of homes for sale will continue to fuel demand.

“For those who want to move but can’t find the right house, then they kind of look at their own house and say, ‘OK, well, how can I change this to, if it’s not my dreams, you know, maybe my near dream home?’ In fact, we have a neighbor, and that’s exactly what they’re doing,” Khater said.

It’s great if you can afford it, and many homeowners with growing net worth and pandemic savings can. But the problem with an aging housing stock is that a lot of people can’t.

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