SUSTAINED MOMENTUM
Atlanta-based Home Depot hopes sales to people who want to upgrade older houses will keep its recent run of revenue gains going:
Fiscal year, revenue
2010, $68.0 billion
2011, $70.4 billion
2012, $74.8 billion
2013, $78.8 billion
2014, $83.2 billion
Note: Fiscal year runs February-January
Source: Home Depot annual reports
Plenty of retailers these days are trying to stay current while also boosting their appeal to an aging population.
Some, including Atlanta-based Home Depot, hope to capitalize on another statistical trend: the nation’s aging housing stock.
About 63 percent of the nation’s homes have reached their 30th birthday, up from 47 percent in 1995. That could mean billions in coming years for Home Depot, as well as archrival Lowe’s and their legions of suppliers, as owners invest in new roofs, kitchen updates and bathroom makeovers with trendy elements like faux wood tile and concrete sinks.
“This trend is a long-term trend that we believe will continue supporting home improvement spending,” Home Depot Chief Financial Officer Carol Tome said recently at an investor conference.
The benefits spread beyond big home improvement chains.
The home renovation and repair industry, valued at about $300 billion, is expected to grow 13 percent in 2016, according to the National Association of the Remodeling Industry. Some home builders that took on remodeling projects as a way to survive during the recession have transitioned fulltime to updating older homes.
And consumers, who traditionally put their houses on the market more quickly in economic recoveries, have not done so this time around, preferring to stay put and build equity, opening the door to repairs and updates.
“The last three years have been some of our busiest,” said Mark Buelow, president of Roswell’s Distinctive Remodeling Solutions. He said consumers put off a lot of projects during the recession, but that the stronger economy is leading them to knock down walls to create more open spaces, add bedrooms and transform kitchens.
To meet the need, both Home Depot and Lowe’s have stocked stores in areas of older homes with supplies remodelers or repairman may need, like fixtures that fit historic houses and compatible replacement parts for hard-to-match plumbing.
“With lower home value to mortgage ratios and lower levels of negative equity, people feel like they have more money to spend,” Tome said. “And we have seen this in our big-ticket spending where transactions over $900 have grown in every quarter since the second quarter of 2011.”
Mike Horn, Lowe’s vice president of pro service, said babyboomers are widening doors and putting in bathroom handrails to gracefully age into their homes, a trend called “castling.”
In addition to roof repairs, owners of the older homes also are spending to install new windows.
Newer houses here
While houses in metro Atlanta generally tend to be newer — especially after more than 100,000 were built during the peak years of 2005 and 2006 — about 40 percent of the area’s homes are 30 years old or older.
The majority are sandwiched in the city of Atlanta in neighborhoods such as Grant Park, Old Fourth Ward, Morningside, Kirkwood and Cabbagetown. But they also are found in 70s ranches in Smyrna, farm houses in east DeKalb, historic homes in Jonesboro and the early ’80s colonials found just about everywhere.
“There is a high mix of them in the city, that’s where most of my work was,” said Kelly Scibona, who worked as an independent architect before joining Atlanta-based builder Front Door Communities.
Seth and Missy Gordon fell in love with their Willow Springs Country Club home in Roswell the minute they saw it. Preferring a contemporary style with open rooms and vaulted ceilings, they were smitten when they walked in the door.
The problem is, the house — which they bought for $350,000 — was built in 1981, and the finishes, bathroom fixtures and overall look screamed throwback.
So they ditched the vinyl checkered floors, scallop-shaped kitchen trim and dark wood framed windows and — with a $250,000 renovation budget — brought the house up to 2015 standards. The makeover included white oak floors, zebra wood cabinets and added walk-in closets for their daughters.
“It’s a very clean aesthetic,” Seth Gordon said of the home’s re-do. “We also reconfigured the baths, added new carpet and updated a guest room.”
That new home look
Seth Gordon said part of what drove him to update was a desire to live in the kind of house that all the accoutrements of today’s trendiest abodes without the price. A new home with all the finishes he sought would have cost twice as much and would be harder to find in his neighborhood.
Updating an older home can have other benefits.
Scibona’s most recent project is a rehab of the 1857 Goulding House in Roswell. The National Historic Register home, built for inventor and naturalist Francis Robert Goulding, is the centerpiece of a new development of 13 houses and 27 townhomes off Roswell’s Canton Street.
Scibona’s team restored the grand staircase in the central hall of the more than 7,000-square-foot house, removed a non-historic sunroom that had been added and created a modern kitchen and garage.
“When you have a new house, you have a blank slate and it can be anything you want it to be,” she said.
“But when you have an older home, especially one that is historic, you have to take time to save those things that should be saved and update where appropriate. In my opinion a house is a living and breathing thing.”
For housing-sensitive businesses, the trend holds the potential to keep a strong rebound going, even if the recovery in construction and sales remains uneven. Home Depot stock more than quadrupled between mid-2011 and last fall, though it has since fallen back a bit. Lowe’s enjoyed similar gains.
“We believe home price appreciation has been a key contributor to our sales growth,” Home Depot’s Tome said. “Once homeowners view their homes as an investment and not an expense, we believe they spend more money on their homes. It is, in a way, a wealth effect.”
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