So, that group of 25- to 40-year-old Americans lumped under the term “millennials” may not have all that much in common with each other in a lot of ways. But when it comes to being homebuyers, there are some attributes that really stand out, and some takeaways there for real estate investors.
A new survey from Angi — the contractor vetting site formally known as Angie’s List — found that almost 70% of millennial homebuyers budgeted at least $25,000 for renovations of their new digs, and nearly half say make that $50,000 or more.
Oh, and nearly half said they were already over budget in the first year of homeownership, and 37% said they are facing or anticipate facing difficulties in hiring pros for their renovations because of material or product shortages. Meanwhile, 31% cited labor shortages as an issue, Angi said in a press release Wednesday.
While people in that age group are probably more likely to be in the nest-buying and -feathering stage of their lives than other cohorts, their experience reflects the pandemic reality of homebuyers rushing to purchase what they can, when they can, and facing some renovations they might not have opted for in a calmer market.
You get what you put in, sometimes more
Those renovations take time and money, and a lot of the latter is being spent at home improvement stores, either by the homeowner or a contractor. And there are some considerations here for investors as well as homebuyers and sellers.
One, of course, is the knowledge that what you put into your property, you’re likely to get back in a sale in such a hot market. (Although it could just as easily be argued that in this hot of a market, in a lot of places, an as-is sale could be just as profitable and certainly easier.)
Two, you can invest in the big dogs that are getting the most biscuits out of this bonanza. Two clear examples are Home Depot (NYSE: HD) and Lowe’s (NYSE: LOW). Their success is not only good for their stockholders, but for the outfits that own their properties, including real estate investment trusts (REITs).
Home Depot and Lowe’s making the most of the surge
The biggest brand names in home improvement were not as affected as most retailers by the pandemic — in many places, they were deemed essential and never had to close — and their latest quarterly reports showed just how well they’re doing.
Lowe’s, for instance, posted comparable sales increases of 24% year over year at its 1,727 stores in 1,257 cities in 51 states and territories. Home Depot, meanwhile, did even better, with 30% year-over-year sales increases at its 1,990 locations in 1,360 cities in 54 states and territories. And both are profitable, as this Motley Fool piece posted today points out.
Although their stores themselves bear little difference to the untrained eye — blue versus orange for the most part — they are different companies, with different financials and prospects. Here are some more Foolish takes on Home Depot and on Lowe’s to help inform your thinking.
The Millionacres bottom line
It’s not surprising that Home Depot and Lowe’s are such obvious beneficiaries of the home renovation surge, not only among new homebuyers, but folks deciding that the old place isn’t so bad after all and just needs some fixing up.
If you’re among those, be prepared, however, to deal with the same shortages and price hikes that are pulsating through multiple industry segments as the pandemic slowly eases. There also are opportunities, too, and it would seem whether you prefer orange or blue, you can do worse than considering buying some of their stock, too, as an indirect real estate investment.
No supply shortage there. They’ll be glad to sell you some.
Originally Appeared Here