Home Improvement Industry Set to Decline as Buyers Are Priced Out

The home improvement industry is experiencing stagnation as homeowner’s cost burdens are higher than in previous years. According to a study by Consumer Affairs, only 41% of US homeowners could afford $500 repairs out of pocket.

Yet, both demand and purchases of home improvement have been steady. Despite this, experts are expecting a decline in home improvements in the second quarter of 2024.

Previously, with many homeowners delaying any sufficient repairs during the pandemic, renovations saw an uptick. However, this increase was met with greater cost to the consumer as inflation has stayed at higher levels since 2020. Additionally, the post-pandemic economy is not the only crisis affecting materials costs as many external factors may potentially stall the industry.

Lumber imports and supply have suffered due to the war in Ukraine, causing instability in windows, doors, and home accessorization in general. While Russia has decreased its wood export prices, there has been a 6% increase in the prices of lumber globally. This hasn’t just affected home renovation, but also paper production and the biomass industry.

Homeowners took on the cost burden, with many saying to surveyors that cosmetic or non-essential home alterations will take a backseat later in 2024. Timber prices may also mean a shift towards cheaper materials like uPVC and plastic resins. However, simply because they are cheaper to purchase does not mean they will be cheaper in the long run.

Many lower-priced materials are not as thermally efficient, thus when they are used in doors and windows, they can lead to higher heating costs. Similarly, inferior materials often lead to more replacements in the future as they can also lack long-term durability.

On top of the complexity of inflation, rising prices do not affect all homes equally. Aside from income, there are also geographical and policy factors that come into play. This can be an issue for homes in conservation areas, where there are strict rules for what can and cannot be installed. 

Depending on the conservation zone or your homeowner’s association rules, you may have to rein in your installations. Since items common to older homes such as wooden double glazed sash windows cost more in terms of both materials and designs, many homeowners may also be priced out of the market in the future.

According to the aforementioned survey by Consumer Affairs, 52% of homeowners had an issue in their properties that they had not yet addressed. The most common issues in homes appeared to be general disrepair (76%), plumbing (60%), and environmental damage (52%). 

Another reason for a decrease in home improvement may also be consumers saving money by attempting DIY fixes. A significant portion of surveyed homes (76%) exhibited signs of wear and tear. These included cosmetic blemishes, loose doorknobs, and locks that didn’t function smoothly. Such issues may not require an expert and, when money is tight, many may otherwise prefer to do repairs on their own. This also affected the supply and demand of supplies and materials, as Forbes noted.

While a slowdown in the industry is expected, the extent is still up for debate. Previous reports have also correctly predicted a drop in sales and services but have been inaccurate in the level of damage to the industry. An earlier report in January 2023 forecast a sharper spending drop, from 16.3% at year-end 2022 to only 2.6% by year-end 2023. While the shock to the industry was far lower, this is indicating a continued trend of underwhelming projections from across the board.

There is speculation that many grants and programs that allow for insulation or heating efficiency improvements have been keeping the improvements industry afloat. Many such programs, like insulation improvements in the UK, allow low-income residents to pay for repairs with government grants and subsidies. Such policies are deemed in the public interest as they are greener measures that put less strain on the fossil fuel grid while improving home heating.

Despite the assistance, the effects of a lack of consumer buying power are showing globally. Home improvement is one of many industries undergoing a decrease in revenue from various external pressures. Other industries suffering losses include cargo airlines (-17.3%), global oil and gas exploration and production (-13.9%), global sugar manufacturing. -3.5%, and many more.

As all industries adjust to different macroeconomic woes, there are bound to be ups and downs. The home improvement industry is no different. Post-pandemic pricing has been a definite wedge to continued growth. While the industry standard prices have not yet returned to pre-pandemic levels, another issue that is stagnating home improvement is the lack of home sales. With no new properties, the industry’s slow-down could continue.

It remains to be seen what will happen in the future. However, it seems likely that many of the forecasts might be right. The exact extent of the decline in the industry’s fortunes is not yet clear.

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