The home improvement industry continues to grow with each passing year, and 2019 is no exception. The average homeowner’s equity has doubled over the last five years, which has resulted in home improvement spending growing twice as fast as other retail industries. There has never been a better time to own a home improvement franchise, and over the next three years, the opportunity to profit from the trends in the industry will only escalate.
The Size of the Home Improvement Industry
Harvard’s Joint Center for Housing Studies estimates that, based on the American Housing Survey, homeowners spent about $383.3 billion on home improvement projects in 2017. This is only home improvement done in their residences. In reality, this number is probably closer to $400 billion, as the survey is only conducted every other year, and this number is projected to continue to grow for years to come, rising at least six percent annually.
Home Improvement v. Other Retail Industries
Though home improvement may fall behind giant industries such as the automotive industry, it is larger than a number of other retail industries, including:
- Restaurants (38 percent larger)
- Department stores (154 percent larger)
- Pharmacies (20 percent larger)
- Clothing stores (55 percent larger)
Why is the Home Improvement Industry Skyrocketing?
The biggest reason for this exponential growth is that homeowner equity has given homeowners more confidence to make the changes that they couldn’t afford during the recession and the years that followed. Now that there is an additional six trillion dollars in homeowner equity, home improvement projects are moving to the forefront of people’s minds. Not only that, homeowners are taking on larger home improvement projects to enhance their homes and lifestyles, instead of simply maintaining their homes. In 2016, the average homeowner spent $2,000 more on home improvement than they did the previous year.
Most Popular Home Improvement Projects
Homeowners are choosing more home remodeling projects. As Baby Boomers age, they are installing more modifications to their home so they can remain comfortably in their homes. In addition, more and more people are interested in smart home technology.
Home Advisor reports that the 10 most requested home improvement projects this year were:
- Bathroom remodels
- Exterior home painting
- A/C installation
- Home additions
- Building a deck or porch
- Concrete patios, steps, and walkways
- Asphalt paving
- Basement remodel
Generational Factors in Home Improvement Industry
Today, Boomers lead the pack in terms of home improvement spending. However, Millennials are likely to eclipse them in the near future. Currently, the trend for Millennials is to buy “fixer uppers” at affordable prices to renovate a little bit at a time. In addition, high-income Millennials are becoming homeowners at a quick rate. Nearly 50 percent of homeowners under 35 have incomes over $80,000 annually. Having a higher income means that they have more wiggle room to create the home of their dreams.
The Near Future for Home Improvement
The current climate for the home improvement industry indicates that home improvement spending is likely to continue to increase over the next several years. As mortgage rates are higher, more and more homeowners are choosing to remodel or renovate their homes over moving, particularly if they bought their home in 2016 or 2017 during the period of historically low rates. The home improvement industry has the added advantage of two age groups expected to spend more on their homes in the coming years: Millennials, as they become homeowners, and Baby Boomers, as they begin installing aging-in-place modifications in their homes.
Join our Home Improvement Franchise
The market is hot, and only growing hotter. If you’re ready to jump in, ProSource® is always looking for self-motivated franchisees who are looking to break into this exciting, growing industry. Get started with our home improvement franchise today.