The annu­al Home Improve­ment Insights Sum­mit is one of the most infor­ma­tive events in our indus­try. Over the course of two days in Chica­go, top indus­try experts from around the coun­try present research, uncov­er trends and share for­ward-look­ing ideas to help atten­dees make informed deci­sions about the home improve­ment prod­ucts market. 

Did you miss this year’s Sum­mit? Not to wor­ry. We’ve assem­bled five high-lev­el take­aways sum­ma­riz­ing the hottest top­ics cov­ered at the event. 

Here’s what you need to know about the state of the home improve­ment prod­ucts market:

1. A recession is looming, though it may not hit too hard.

Danush­ka Nanayakkara-Skilling­ton, assis­tant vice pres­i­dent, fore­cast­ing and analy­sis for the Nation­al Asso­ci­a­tion of Home­builders, pre­dicts that we will expe­ri­ence a mild reces­sion but noth­ing as dras­tic or long-lived as the 2008 U.S. reces­sion. Here are some of her findings:

• NAHB/​Wells Far­go Hous­ing Mar­ket Index is cur­rent­ly at 46, while any­thing below 50 sig­nals that con­di­tions are wors­en­ing. This is a strong indi­ca­tor that builder con­fi­dence is low and buy­er traf­fic is falling.
• The Fed­er­al Reserve is aggres­sive­ly tight­en­ing mon­e­tary pol­i­cy, and inter­est rates surged at the start of 2022.
• Eco­nom­ic growth forecasts:
  • 1.6% in 2022
  • 0.3% in 2023
  • Weak rebound in 2024

2. Housing affordability will decline in 2022 – 23.

Nanayakkara-Skilling­ton also fore­casts that sin­gle-fam­i­ly home­build­ing starts will decline through 2023 due to increas­ing inter­est rates, with a pre­dict­ed rebound in 2024. This will tem­porar­i­ly put pres­sure on hous­ing afford­abil­i­ty. Anoth­er fac­tor in the mar­ket? The entrance of the mil­len­ni­al gen­er­a­tion into peak home­buy­ing years. 

Mil­len­ni­als con­sti­tute the largest group of home­buy­ers (46%) and will dri­ve up demand at a time when new homes are on the decline and house afford­abil­i­ty rates are his­tor­i­cal­ly low. The NAHB/​Wells Far­go Hous­ing Oppor­tu­ni­ty Index is the low­est it’s been in decades, sig­nal­ing that home­own­er­ship is a less acces­si­ble prospect than it was in the past.

3. Remodeling will make a strong comeback.

Despite the gloomy out­look for hous­ing afford­abil­i­ty, Car­los Martín, project direc­tor of the Remod­el­ing Futures Pro­gram for the Har­vard Joint Cen­ter for Hous­ing Stud­ies, point­ed out that price increas­es raise equi­ty in home­own­ers’ exist­ing prop­er­ties, there­by rais­ing the incen­tive to invest in home remodeling. 

Anoth­er inter­est­ing per­spec­tive came from Zonda’s Prin­ci­pal of Build­ing Prod­ucts Todd Toma­lak. Toma­lak agrees there will be a decline in remod­el­ing over the next year or so: Con­sumers are con­cerned about reces­sion­ary fall­out and increased home prices, which will cause them to reeval­u­ate where they want to invest their mon­ey. Yet, as prices begin to sta­bi­lize, dis­con­tent­ed home­own­ers will begin to focus more on improv­ing their cur­rent homes as the hous­ing mar­ket expe­ri­ences record-low inven­to­ry mixed with high­er prices.

4. It’s time to get to know Generation Z.

Gen­er­a­tional dif­fer­ences were heav­i­ly cov­ered at the Sum­mit, and we would be remiss if we didn’t touch on the impor­tance of Gen­er­a­tion Z’s swift approach toward home­buy­ing years. Although Gen Z is not a large audi­ence for home improve­ment prod­ucts yet, mar­keters should have their unique char­ac­ter­is­tics on the radar.

“The more we can learn about Gen Z now, the faster we will be able to adapt and be able to con­nect, under­stand and mar­ket to them when the time comes,” said Ali­cia Rain­wa­ter from The Cen­ter for Gen­er­a­tional Kinet­ics. She claims Gen Z sup­ports brands with strong per­sonas and mes­sages that align with their key val­ues, and the social issues they care most about are cli­mate change and social jus­tice. If your brand strat­e­gy doesn’t include a gen­uine cor­po­rate social respon­si­bil­i­ty part­ner­ship yet, you may want to con­sid­er one if you’ll be mar­ket­ing to Gen Z in the near future.

5. Technology will continue to transform the home improvement products market.

Albert Vita, founder of home improve­ment online retail­er Home­birds, spoke about emerg­ing tech­nol­o­gy and its poten­tial impact on home improve­ment shop­ping. Vita intro­duced the con­cept of eras in the his­to­ry of the world wide web as it has evolved through dif­fer­ent tech­nolo­gies and for­mats and used dif­fer­ent dri­vers, or back­bones to grow. He then focused on the grow­ing preva­lence of the lat­est era, ​“Web 3.0,” and how it will reshape the way home improve­ment shop­ping happens.

• Web 1.0
  • Ori­gin: 1990
  • Back­bone: hyperlinks

• Web 2.0
  • Ori­gin: 2004
  • Back­bone: blogs

• Web 3.0
  • Ori­gin: 2014
  • Back­bone: blockchain

Web 3.0 includes the devel­op­ment of the meta­verse. By 2026, it is pre­dict­ed that 25% of peo­ple will spend at least one hour per week in the meta­verse for work, shop­ping, edu­ca­tion, social or enter­tain­ment pur­pos­es. Vita pre­dicts this will impact the home improve­ment indus­try by giv­ing shop­pers the abil­i­ty to see and touch prod­ucts ​“in per­son” while shop­ping vir­tu­al­ly in the meta­verse. While this abil­i­ty is still sev­er­al years out, think­ing about inno­va­tions on the hori­zon and how they will impact your orga­ni­za­tion is a help­ful prac­tice for home improve­ment brands.

Where do we go from here?

The Home Improve­ment Insights Sum­mit brought time­ly con­ver­sa­tions and help­ful, action­able advice from experts nav­i­gat­ing a fast-chang­ing indus­try. How­ev­er, it is impor­tant to remem­ber that con­di­tions are sub­ject to change at a moment’s notice. It’s cru­cial to stay up to date with the most cur­rent home improve­ment cat­e­go­ry research and fore­casts to make the best deci­sions for your business.

Join­ing the Home Improve­ment Research Insti­tute as a mem­ber pro­vides access to month­ly insights and infor­ma­tion to help you think proac­tive­ly about obsta­cles both cur­rent and future home­own­ers will face. Brands that bet­ter under­stand where the mar­ket is head­ed will be bet­ter equipped to address these challenges.

To get the lat­est fore­casts and updates from the indus­try, be sure to join HIRI as a member.