By Tonya Garcia
Bank of America data shows that millennial homeownership is rising, and since this group prefers a fixer upper, there’s potential for lots of projects in the coming months, which could be a good thing for home improvement retailers like Home Depot and Lowe’s Cos.
Bank of America polled 1,156 adults between the ages of 24 and 40 this month for its seventh annual Millennial Home Improvement survey. The survey found that a majority of millennials are homeowners (53%, up from 52% in 2021), and 67% are likely to buy a new home in the the next two years.
“The number one reason cited was an improving financial position, following the trend from the last few years of our survey,” Bank of America analysts wrote.
“This is consistent with strong household balance sheets and rising wages in the U.S.”
But millennials aren’t looking for something brand new. Instead, 80% say they prefer an older home in need of work in order to save money. More than three-quarters of those who already own a home say they started a renovation project in the first 12 months after making the purchase, “meaning that the recent housing boom still has lasting benefits to renovation activity.”
And with smaller projects like painting complete, Bank of America says big projects, like a kitchen remodel, are yet to come, “which we view as bullish for future large-ticket spending.”
After its fiscal first-quarter earnings announcement, Lowe’s Chief Executive Marvin Ellison told MarketWatch that he was still confident about the home improvement retailer’s future.
And since 75% of Lowe’s business falls in the do-it-yourself, the Bank of America data should bolster that confidence.
“Millennials appear comfortable completing a variety of projects without the use of a professional,” the Bank of America report said.
“Millennials feel most comfortable with painting/wallpapering, upgrading appliances and smart home features (unchanged from prior surveys) and least comfortable with more complex projects such as altering floor plans, roofing and electrical work.”
Bank of America says the millennial demographic will be favorable for both Lowe’s and Home Depot. The data shows millennials are most likely to shop at Home Depot, but Lowe’s has regained the number two position from Amazon /zigman2/quotes/210331248/composite AMZN +3.15% , though a growing number of millennials are purchasing home improvement items online.
The preference gap between Home Depot and Lowe’s is narrowing, Bank of America says.