US HOMEOWNER DILEMMA: MOVE OR RENOVATE?
And, neither looks really promising in the near term, so what should you do:
- RENOVATION: Looks like it will remain constrained. Some insights:
- According to Dean Seal in his article in last Wednesday’s WSJ, “Home Depot expects demand to stay tight through the rest of the year, as homeowners wait for lower interest rates before pursuing big projects.”
- Home Depot expects a decline in comparable store sales of 3%-4% though the balance of this year. This shows the decline is nationwide.
- Their CFO stated: “Spending was strained for products linked to big projects, particularly those that may require debt financing. Categories like kitchen, bath, lighting, flooring. This is where they have seen the biggest degree of softness.” The Fed rate cut in September will help here. (see below)
- Comparable sales of products priced at $1000 and above dropped 5.8% in Home Depot’s latest quarter compared with a year earlier.
- HOME SALES: Existing home sales fell 5.4% in June compared with a year earlier according to Natl. Assoc. of Realtors.
- However, mortgage rates have recently fallen to around 6.5%, the lowest rate since early 2022.
- The Fed will cut its prime rate at its September 24th meeting. Most think it will be ¼%, but some see a bigger cut of ½%. Either way, it’s a start.
- Any lowering will cause some movement. The demand is pent-up. The dam will break.
- WHAT SHOULD YOU DO?
- STAY INFORMED: As you are now.
- BE PREPARED: Promotions. Aggressive financing. Whatever will give you an advantage.
- ADVERTISE NOW: Get your name out there. Ask for the business, if you don’t your competition will. Digital is the cheapest. Google Ads makes the most sense, but Facebook/Instagram may have its advantages in certain cases.
Onward & Upward!
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