Where is pricing power strongest in the residential remodeling space? Where is it weakest? A thread:
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That's one of the biggest questions this year, as consumers stare down the highest inflation in four decades. 2/
Our latest research shows that BIG PROJECT REMODELS ARE LESS SENSITIVE TO RISING PRICES than small projects. 3/
In other words, consumers planning large remodels (like a major kitchen/bath update) say they are *MORE WILLING* to swallow price increases than those planning small projects (like repainting their home office).
Counterintuitive? Not necessarily... 4/
Why might this be? My humble take:
1) With the worst buying conditions in a generation and extremely limited opportunities to trade-up into newer, higher quality homes/locations, homeowners are hunkering down and planning to stay for longer
5/
2) The average homeowner is sitting on $53K of fresh equity in their house since the pandemic (and they're starting to tap it -- the next wave cash-out refis are just getting started, likely passing $100b per qtr in '21.)
6/
3) Large remodels are "must haves" and more likely to be undertaken by high income/wealthy households who can handle higher prices
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With prices up double-digits for almost every product category, this is worth keeping a close eye on...
(end thread)
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