Housing can be a good investment.
Anyone who bought a home before the pandemic can attest to that. The gains this cycle have been spectacular.
But housing is also a form of consumption.
You not only have property taxes and homeowners insurance but ongoing maintenance, lawn care, wear & tear, renovations, decorations, furniture, etc.
I was reminded of this when we had a minor roof leak issue this week. It was nothing major, just a little leak in our screened-in porch.
The roof repair company sent a guy who gave me two options:
Option 1. Really get in there and tear some stuff up at a cost of thousands of dollars.
Option 2. A minor fix to some joint/bracket that I don’t understand, seal a few things and call it good for a much lower cost.
He recommended option 2, which I was obviously on board with considering the cost difference.
This was his sales pitch: “It’s $500. Pretty cheap. $500 is basically free these days.”
I guess that’s inflation for you but this got me thinking about the potential renovation boom we could have in the coming years. If it costs $500 just to get someone in the door, how expensive will it be when people do real work to their homes?
My entire thesis of a renovation boom in the coming year rests on two facts:
Homeowners have a boatload of equity. In the past 10 years alone, U.S. homeowners have added more than $22 trillion in home equity:
Homeowners with 3% mortgages will have a hard time giving up a low rate. If you can’t move because other houses are too expensive or you don’t want to move because you’re locked into a 3% mortgage, there are going to be tons of people looking to renovate their current