Wary of losing their job or letting a coronavirus-infected stranger into their homes, many have put off home renovation projects.
If you are stuck in your house, gazing furtively at all the things you don’t like about it, you’re not alone. Homeowners across the country are seeing things that need to be repaired, replaced and improved. And it seems some are doing something about it.
National home improvement chains such as Home Depot, Lowe’s and Ace Hardware saw strong sales in the first quarter as folks changed out hardware, faucets, sinks, appliances and cabinets, threw on some new paint inside and out and fed their lawns.
Lowe’s posted an 11 percent jump in sales, including an 80 percent gain in online sales. Home Depot’s sales were up 7.5 percent, even though it trimmed store hours and limited customer traffic. And after a 4.2 percent gain in the first quarter, Ace Hardware’s 3,200 retail stores posted a 26 percent jump in same-store sales in April, including a whopping 580 percent jump in online transactions.
Most of their growth was “in the $300-$500 basket – the core of the do-it-yourself sweet spot,” said Steve Basten, senior manager of building products research at the John Burns Real Estate Consulting firm in Irvine, California.
Recovery in September?
The remodeling business hasn’t fared nearly so well. These small contractors do the big things owners can’t do, or fear doing, on their own: replacing entire kitchens and baths, adding new rooms, building decks or tricking out unfinished basements. And according to a survey by the National Association of Home Builders, the pandemic all but shut them down.
Angie Hicks of Angie’s List disagrees.
“We’re not seeing as much ‘love-to-have’ things right now,” she told me in a phone interview. “But there’s still lots of home improvement going on, especially in the nondiscretionary, essential stuff.”
But only 4 percent of the companies responding to the NAHB poll said they were taking the same number of inquiries as before the country went into quarantine. Most said hardly anything new was coming in, and 84 percent said existing projects were either being delayed or canceled.
Harvard’s Joint Center for Housing Studies had projected a slowdown in home improvement spending this year anyway. Now, though, Abbe Will, who runs the Center’s Remodeling Futures program, said the decline “will be even more pronounced.”
Even though many owners remain hesitant to let workers into their homes right now, many remodelers believe their prospects are looking up. More than two-thirds expect a recovery by September, reports Burns executive Elizabeth LaJeunesse.
“Some are even worried they might not be able to meet the demand,” she said.
Low Inventory Could Spur Projects
Many homeowners are feeling stuck, and not just because of quarantine: They want to move, but there’s either nothing on the market, or their incomes have shrunk, and they now can’t afford a new place.
Remodeling can be a great option for those homeowners, especially those in older houses.
“Once a house crosses the 15-year threshold, its owner is much more likely to remodel,” said Todd Tomalak, a Burns senior vice president.
If you have the ability to give your place a makeover, you’re one of the lucky ones. But some people who take on such tasks quickly find themselves in over their heads. Indeed, a major source of business for the professionals – more than 30 percent, the NAHB said – is from owners who have either botched the work or found themselves needing expert help to keep going.
If you find yourself needing a contractor, you first have to figure out how you’re going to pay for him or her. Cash is great; credit cards, not so great. The interest on those things is brutal. If you don’t pay the entire bill when it’s due, you’ll end up paying much more – maybe 25 percent more – than what the remodeler charged.
An Opportunity for Banks
Another option is to refinance your current mortgage. That way, you might be able to take advantage of the lowest rates in ages while pulling out enough of the equity you’ve built up in your home to pay for the work. Older owners might want to consider home equity conversion loans, aka reverse mortgages, to achieve the same goal.
Many people also borrow against the value they have in their homes. With a home equity line of credit, you can take out just enough money to cover the job and pay it back on a monthly basis. However, the HELOC market has tightened considerably since the virus took hold. Another possibility is a personal loan from your bank.
Lew Sichelman
Before you settle on a remodeler, make sure they’re taking the proper precautions before and after entering any homes they work on. A contractor matching service called Porch suggests asking contractors for references from owners like yourself to be certain they follow certain protocols.
Porch’s Max Anderson said most pros have adopted COVID-19 policies, including washing their hands frequently, cleaning their gear between customer visits and wearing masks, gloves and shoe bootees. Some companies are even checking employee temperatures when they show up for work and sending home any who don’t pass muster.
Hicks reports the same: An Angie’s List survey found that more than 90 percent of the 1,000 service professionals polled have added at least one new cleaning measure since the pandemic struck. Most are doing more frequent cleanings, and more than a third have purchased more personal protective equipment.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.
