Rising Mortgage Rates Prompt Would-Be Sellers to Stay in Place and Renovate
Home sales may be slowing and home prices may be falling, but with sizable equity gains from record home appreciation, homeowners are moving full speed ahead with renovation projects. As a result, home improvement retailers such as Home Depot and Lowe's are reporting strong quarterly earnings and rising stocks.
As elevated housing costs force would-be sellers to stay in place, a growing number of homeowners are taking on large remodeling projects funded by rising equity gains. By the end of Q1 2022, Americans had a collective $11 trillion dollars in tappable equity, amounting to roughly $207,000 per homeowner, CNBC reports.
Home Depot financial chief Richard McPhail pointed to an “improve in place” mentality among current homeowners, who might have wanted to sell but changed their minds because they could no longer command top dollar.
“All we can do at this point is repeat what our customers are telling us,” McPhail said. “There is a dynamic we don’t see much in the market. With rising mortgage rates, homeowners are staying in place.”