A pool under construction in Washington, DC.
Pat Pugliese | CNBC
There is a lot of activity in Justin Sullivan’s backyard, as workers hammer out his new deck, and jackhammers pound through the basement.
Concrete for the new pool has already been poured. The Sullivans had planned a renovation before the pandemic hit, but then suddenly it became a much bigger project.
“The pool, the home gym, the sauna — those are things that when you’re not able to go out, your house is an enjoyable space where you can live bunker-style and still be active, still feel comfortable, and still enjoy,” said Sullivan. “The kids will have spaces to make sure they can work from home, and when it gets really hot in the summertime, they’ll have a place where they can cool off.”
The Sullivans are far from alone in their desire to create a retreat, even if that retreat is in their own basement. Houzz, an online home remodeling platform, reported a 58% annual increase in project leads for home professionals in June.
Those working on outdoor spaces saw the biggest increase in demand, with searches for pool and spa professionals three times what they were a year ago. Not far behind, landscape contractors, deck and patio professionals all saw more than double the demand.
Pool demand is so strong that even Wall Street investors are taking note. Poolcorp, an international distributor of swimming pool supplies, parts and outdoor living products, hit an intraday all-time high this week and is up over 54% year to date. The stock is on pace for its best year since 2003.
Much like real estate agents, remodeling professionals are now adapting to a new world of social and professional distancing.
Jason Sullivan’s home under renovation in Washington DC
Pat Pugliese | CNBC
“Over the past year we’ve made many significant additions and improvements to how our platform helps homeowners find and connect with the right professional for their project — enabling people to directly schedule video meetings with pros through Houzz Pro is just one example — and we’re really seeing the impact of those investments in the number and quality of connections we’re making,” said Liza Hausman, vice president of industry marketing at Houzz.
Kitchen and bath have always been popular remodeling choices, but even those saw a 40% jump in demand in June compared with a year ago. More people are cooking and eating at home, and kitchens are now even more the center of family life.
Home extensions and additions jumped 52%, and security and privacy also saw much greater demand with interest in fence installation and repairs up 166%.
Homeowners are likely getting extra incentive from the record high amount of home equity they now have. Home prices continue to gain, despite the economic downturn, as demand for housing soars.
Just over 15 million residential properties were considered equity-rich in the second quarter, meaning mortgages on those properties was 50% or less than the value of the home, according to ATTOM Data Solutions. That is 27.5% of all mortgaged homes in the U.S., up from 26.5% in the first quarter.
“Homeowners saw their equity rise far and wide throughout the United States during the second quarter of this year in yet another sign of the housing market punching back against the Coronavirus pandemic,” said Todd Teta, chief product officer with ATTOM. “More property owners rose into equity-rich territory and escaped the seriously underwater lane, putting more money into the average household.”
Justin Sullivan, who is also a contractor, says he is seeing more people use their home equity to fund these projects.
“We’re also hearing that money that folks are saving from not going out to restaurants, not eating out, not going on vacations, those things are being saved and they’re deciding to add that value back into their homes as an investment,” said Sullivan. “They have more confidence in their homes as investments.”
Sheltering at home clearly influenced demand, as more than three-quarters of all U.S. homeowners said they had done some type of home improvement project during the pandemic, according to a recent survey by Porch.com, another remodeling platform.
More than three-quarters also said they plan to take on a new project in the next 12 months. The top motivator was, “finally having the time,” according to the report. Next was adding value to the home and, finally, making the home “feel more cozy.”
While homeowners may continue to do more projects throughout the fall, some experts predict spending will fall. Harvard’s Joint Center for Housing predicts annual declines in renovation and repair spending of 0.4% by the second quarter of 2021.
“The remodeling market was buoyed through the early months of the pandemic as owners spent a considerable amount of time at home and realized the need to update or reconfigure indoor and outdoor spaces for work, school, play, exercise, and more,” said Chris Herbert, managing director of the Joint Center for Housing Studies.
“However, sharp declines in home sales and project permitting activity this spring, as well as record unemployment, suggest many homeowners will likely scale back plans for major renovations this year and next.”