Homeowner Equity - How will it shape the market?

[Sanjeev Advani]

Whether you own your own home, or have investment properties, it is always important to see what the trends for housing look like. One way I like to do this is follow the big box housing related retailers.

Recently, Home Depot, CFO, Carol Tome sat down with CNBC’s, Jim Cramer for an interview on how they are growing their company through the holiday season. From November 17, 2016 through November 23, 2016, Home Depot is up more than 4.5%, and they attribute that to their ability to know their customer base, and cater to them quickly.

Home Depot stepped into the Christmas tree, decorations, lighting and technology market this season. They are now the highest selling retailer of Christmas trees, and have increased their stock returns based on the holiday sales peaking. However, Carol Tome, had a good point when she brought up homeowner shopping behavior.

She said that now we are in a period where homeowners are seeing equity in their homes again, and the current thought process by homeowners, seems to be that when your home is gaining equity you want to make it nicer. For example, because the value of your home is coming up, you are more likely to put in the new floor you have been waiting on, or remodel the kitchen.

In my opinion, when we start seeing the revival of home renovation numbers, we start to see the resale numbers soften a little. Because people are looking more to their home equity numbers to help them with their cash flow, they will want to make their current residence better before they sell it, but people will be looking to sell when we see the next peak.

Currently there is a lot of speculation on which way the market will go.

What are your thoughts?

Written By

- Sanjeev (Sunny) Advani