Surge in Home Improvement Projects Amid COVID-19

As the pandemic keeps Americans in their houses and apartments, many are pulling out their toolboxes and getting to work on home improvement projects. Quarantine has us spending much more time than normal in our homes, resulting in both listless boredom and displeasure with our surroundings. What was once a minor flaw is now a glaring wart. Evidently, home improvements and renovations are on the rise as people decide they need to spruce things up. 

Bank of America polled 1,054 Americans about their attitudes and shopping habits and found that over 70% have decided to tackle home improvement projects, with millennials spending the most to get the job done and more projects planned for the upcoming year.

Bank of America analysts note that they, “expect some near-term deceleration as parts of the population go back to their places of business and spend less time at home,” but maintain that, “COVID-19 could provide a longer-term benefit for home improvement stocks if it ultimately does cause an increase in housing turnover.”

“A shift into larger existing homes (corresponding to a shift out of cities) and older homes requiring renovation (which most young buyers can more easily afford), could be a multi-year tailwind,” analysts add.

Companies Winning the Pandemic

The Wall Street Journal reports that home improvement stocks have been on the rise, reaffirming the nationwide interest in upgrading living spaces. Home-Depot’s revenue rose 23% from the year-earlier period, and Lowe’s reported a 30% increase in revenue from May to July. Likewise, Tractor Supply stock has soared 69% over the last three months, as people direct their attention to their outdoor living spaces.

These companies, Lowes and Home Depot, are deemed “essential” by most municipal governments, which has greatly contributed to their success. Both companies have reported an increase in foot traffic since April.

As one might expect, home-improvement and furnishing companies with strong online presences are well poised to succeed as well, while many remain hesitant to enter public spaces. Wayfair and Overstock have seen growth in sales since the start of the year, with Wayfair shares tripling since the end of 2019.

Seth Basham, a specialty retail analyst at Wedbush Securities, says that “These trends have legs … the longer we see people nesting, the more ingrained the shopping behavior is and the willingness and desire to improve and upgrade the home is, even as we move into 2021.”

Basham says that the continued success of these companies reflects a greater trend in consumer spending, as people reallocate dollars that would have gone to things like travel and dining, to groceries and home upgrades.

Underpinning this trend in home improvement trends is a broader shift in the real estate market: the urban exodus. As people spend more and more of their days at home, comfort and space have become a priority. Cramped, dishwasher-less apartments are becoming increasingly unappealing, as Americans are no longer tethered to cities nor are they able to take advantage of what was once a vibrant location. Stay tuned for a more comprehensive blog on this real estate trend, and its greater implications on the market as a whole. If you are looking for insurance to cover your home and all of its new improvements visit our Real Estate page.