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Market Trends

Consumers Spending Cash for Home Improvements

Interior decorating leads the projects planned for 2000.

Americans plan to invest more money to fix up their homes this year, according to the fifth annual American Express Retail Index on home improvement. The 2000 survey found that household budgets for home improvement projects outpaced the nation's economy, rising to an average of $2,888, a five percent gain over 1999. (See D&WC, July 1999) While the number of Americans planning home improvement projects remained steady at 39 percent, the survey found that more Americans are undertaking multiple projects as well as those that require bigger budgets such as kitchen and bathroom remodeling and landscaping. In addition, the survey revealed that spending on the home is a common expense for most consumers with more than half reporting they purchase new items for their homes at least once a month. The American Express Retail Index on home improvement is compiled from a national, random survey of more than 900 consumers. "In many parts of the country, the tight housing market makes it difficult for consumers to purchase new homes. Therefore, home improvement takes on an even greater priority," said Valerie Soranno, vice president and general manager of American Express. "And, as the economic boom moves into its ninth consecutive year, updating and improving their homes has become a part of consumers' everyday lives." PERSONAL STYLE Americans' sense of style and taste is having an impact on their homes. More than half (55 percent) of those surveyed reported purchasing new items for their homes, like plants or closet organizers, at least once a month. In addition, "change in personal taste" was the main reason for tackling larger home improvement projects for 50 percent of respondents. Other reasons given include: •mandatory maintenance (32 percent) •a desire to increase their homes' resale value (nine percent) • the need for more space (seven percent). Personal style also is a growing source for home improvement ideas. This year, twice as many consumers (51 percent versus 25 percent in 1999) said they find inspiration within themselves for their home improvement and redecorating ideas. Other sources for inspiration include: •newspaper and magazines (48 percent), •television home and design shows (38 percent) •neighbors and family members (41 percent), •retailer displays/showrooms (20 percent) •do-it-yourself books and videotapes (19 percent). Additionally, the survey found 72 percent of consumers said they planned to handle home improvement projects on their own, up from 67 percent in 1999. To find the needed materials, 65 percent said they would shop at home improvement stores. Other shopping designations include: •hardware stores (19 percent) •department stores (16 percent) •gardening stores/nurseries (13 percent) •lumber yards (11 percent) •home decorating stores (10 percent) •specialty shops (nine percent) •home furnishings stores (eight percent). THE ROOMS CHANGED Topping the list of planned home improvement or decorating projects is interior decorating, cited by 43 percent of Americans. Other types of projects planned this year include: •renovation/remodeling (35 percent) •landscaping (34 percent) •gardening (29 percent) •mandatory maintenance (26 percent) Landscaping and gardening showed the largest increases of 11 percent and 10 percent respectively. For the second straight year, the living room—cited by 46 percent of Americans—will be the most popular room to refurnish or remodel. In addition, the number of people planning to make over their bathrooms this year doubled to 31 percent. Other rooms cited for remodeling include: •the kitchen (31 percent) •bedroom (30 percent) •master bedroom (27 percent) The survey also found that Americans are most likely to renovate their kitchens (38 percent) followed by bathroom (36 percent), master bedroom (20 percent), living rooms (17 percent) and other bedrooms (16 percent). For the first time, the survey also asked consumers what high-tech amenities they would consider adding to their homes. Surprisingly, 25 percent said they weren't interested in adding any high-tech options. Among those who wanted cutting-edge features, the following were the most popular: •state-of-the-art home theater system (16 percent) •high-speed Internet access (13 percent) •high-tech security system (11 percent) •solar hating (10 percent) •a house wired for sound (seven percent). SAVING UP Survey results show that 79 percent of Americans plan to pay for their home improvement projects with cash, up from 69 percent in 1999. Other popular ways to finance home projects include tax refunds (15 percent), credit/charge card (13 percent), home improvement loans (nine percent), company bonus (six percent), mortgage refinancing (two percent) and family loan (two percent). With the exception of cash, all other payment categories remained level with 1999. American Express Co. is a diversified worldwide travel, network and financial services provider founded in 1850. For more information, visit www.americanexpress.com.