TRG | The Bottom Line – 4/1

A greater number of people want to own a home in the wake of the global pandemic, while at the same time there is an ever-increasing number of investors buying and building homes. This incremental factor adds tightness to a market that is already underbuilt. The pace of new homes coming to market remains slow, and interest rates are still low on a historical basis. These factors, among others, contribute to a greater willingness for homeowners to stay in their homes and improve versus moving. The step-up in work from home/anywhere adds to a tight market and drives greater R&R spending. Against that backdrop, there is a meaningful number of homes started that are not completed, creating a cushion and some predictability of demand through a large portion of 2022. Will rising interest rates, a tight supply chain, an even tighter labor market and geopolitical tensions shake consumer confidence and cool the housing boom? The catch is it’s hardly a “boom,” as all the previous factors have limited the magnitude of growth. Rising rates, however, may cool institutional investors from pouring money into the market, allowing Main Street to have a better chance at buying a home.