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Home Depot's Sales Rebound Muted by Inflation in Fuel and Lumber
Home Depot Inc.'s sales rebounded last quarter as Americans took on more remodeling projects, but rising costs for lumber and transportation are weighing on profitability.
[...] Home Depot and its smaller rival Lowe's Cos. are often seen as proxies for the health of the housing sector because property owners spend more on their homes when they believe values are rising. But for several quarters there's been increasing concern that years of robust home-price gains are cooling. For its part, Home Depot has continually said that a shortage of available homes in many markets would actually underpin higher home-improvement spending.
[...] Even as the overall housing market looks to be cooling, several trends are driving demand for home-improvement products. A shortage of available listings has slowed property purchases, causing some owners to opt for sprucing up their homes instead. Additionally, more people are staying longer in their homes, which also supports the uptick.
The labor market also plays a role: A strong run of hiring, coupled with moderate wage growth, has boosted Americans' wherewithal to spend money on fixing up their homes. Spending on home improvement -- which accounts for about 38 percent of private residential construction outlays -- surged 13.8 percent in June from a year earlier to reach $221 billion, according to Commerce Department data. Going forward, the job market may continue to propel housing and remodeling demand. But potential hurdles include a pickup in mortgage rates, a shortage of skilled workers for building and remodeling projects, and rising costs for construction materials such as lumber, which is affected by tariffs.
(Score: 3, Interesting) by schad on Wednesday August 15 2018, @04:00PM
Banks don't want to be landlords. Any house that has sat empty for a year will need repairs, regardless of the state it was in originally. Banks don't want to have to deal with that. They don't want to have to deal with renters, and rental agreements, and inspections. To them, it's a business they just don't want to be in.
Of course, banks would happily sell to someone who does want to be a landlord. But landlords want to be as close to 100% capacity as possible, all the time. That way, they don't have to pay to maintain a vacant property, which of course generates zero revenue for them. It also lets them increase rents, making them more money.
They can get away with this because a large chunk of the rental market is... non-free, in one way or another. A lot of units are rented by giant companies with resources that a small landlord couldn't hope to match. Sure, right now they are just sitting on their piles of cash, but they can and will spend it to bankrupt anyone who tries to compete with them. Another problem is HOAs. Where I live, it's almost impossible to find a house that's not in an HOA, and HOAs hate renters. Third, city governments can actually get involved, for basically the same reasons that HOAs do.
These all make it very costly and high-risk to buy up vacant properties and then rent them, especially if you're not a huge company with massive resources. People still do it, but I agree, it doesn't happen at nearly the rate it ought to. The main question is what to do about it. If you try to force the bank to do something, you're likely to make banks less willing to offer mortgages, especially to more-risky borrowers. If you try to force HOAs and cities not to get in the way, you'll face a popular revolt; these stupid restrictions exist because people want them to exist. I don't really know the answer.