Home ownership is the foundation of the American Dream and the coronavirus pandemic has created a surge in home improvement spending, explains Tony Sagami, editor of Weiss Ultimate Portfolio.
Americans have been forced to spend more time in their homes (nesting) and are using their house differently — as an entertainment center, gym, classroom and office. Those new uses have ignited a remodeling boom.
According to Max Anderson, the chief economist at Porch.com, home improvement spending has reached an all-time high. "In terms of like measured history in the United States, this is the highest levels of home improvement spending we've ever seen,” said Anderson.
- Deck construction: up 275%
- Landscaping projects: up 238%
- Fence installations: up 144%
- Home additions: up 52%
- Kitchen/bath remodels: up 40%.
Overall, more than three-quarters of all U.S. homeowners have done some type of home improvement project this year. And despite the recession, Americans have the wherewithal to fund home renovations because of:
1) Increased homeowner equity — due to rising home prices — by more than 100% over the last five years
2) Record low refinance mortgage rates.
Plus, the age of America’s housing stock begs for renovation. The average age of America’s 137 million homes is 40 years old and 40% are at least 50 years old.
Additionally, home ownership has increased to 65.3%. And due to the pandemic, those homeowners are spending more time within their four walls and fences. It’s clear to see why renovations are on the rise.
In the last quarter, Lowe’s Companies (LOW) beat the pants off Wall Street’s expectations, with revenue of $27.3 billion, a 34.2% year-over-year increase and $3.06 billion more than Wall Street was expecting.
Earnings per share of $3.74 — a 74% year-over-year increase — also beat expectations by $1.06. And profit margins rose 197 bps to just over 34%.
Lastly, we’re just in time to collect a dividend. Lowe’s will pay a 60-cent-per-share dividend on Nov.4 to shareholders of record as of Oct. 21, 2020.
