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Home Improvement is Way Up

COVID has had an effect on all of us. Businesses have shut, people have been talking about a major recession and it seems like all might be stormy skies ahead. But that's not the real story. For many folks, their home has become their whole world, and renovations are on the rise.

During this pandemic, instead of everyone eating into their savings, the numbers actually went up. The U.S. Bureau of Economic Analysis reported that the personal savings rate hit a historic 33 percent. Spending declined by a record 13.6 percent at the same time. People were forced to work from home in spaces that were not suitable for their newfound purpose.

The Great Financial Recession in 2008-09 saw folks cutting spending on home improvements for three years straight. However, when Covid hit and lockdowns began, there were vast swathes of the population that could switch to remote working and keep their incomes while spending way less on commuting as well as many other costs. The government also had a role to play. Interest rates were cut to almost nothing and the federal government boosted unemployment insurance as well as sending stimulus checks out. This perfect storm of factors meant that instead of people putting the brakes on spending money on home improvements the exact opposite happened.

The Home Improvement Research Institute says that The US home improvement market is a massive $440 billion, and that is just for products alone. The fact that so many people want to do work on their houses and convert garages and lofts or basements into home office spaces has meant that certain products are more expensive than a year ago. Prices have skyrocketed. The price of lumber and other building materials is up 180 percent in just one year, according to research.

If you wanted to purchase a 4-foot-by-8-foot sheet of drywall, last year it would have cost 6 dollars, and now it's over a quarter of the value more, at over 8 dollars. If you wanted to do any framing or build a deck you will find out that a 2-by-4 cost $2.25 a year ago, now it sells for pretty much double the price at $5 or more. The cost of building materials for a 12-foot-by-16-foot deck has increased by at least $5,000. Some materials like plywood have become almost unaffordable. A sheet of plywood the same size that sold for $26 last year is now close to $80.

No matter what your project you will find it more expensive to do than a year ago. However, if you are working from home and saving more money, why not treat yourself and raise the value of your home simultaneously. Just make sure you wear safety goggles while you do it.

 

 

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

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