story by Kim Souza
ksouza@thecitywire.com
It’s been quite a while since home values across Northwest Arkansas have posted double-digit gains in just one year, but that reality is fueling more home improvement projects and home and garden retail sales in the area. This mimics a trend underway across much of the country.
“Consumers are feeling wealthier today because their home values are rising. They are not out buying sweaters or apparel but they are buying autos and investing in the homes,” said Heather Hughes, vice president of AIG SunAmerica Funds.
Retail sales reported by the U.S. Census Bureau from April indicate home building and gardening supply retailers had sales increases of 5.9% over a year ago, eclipsed only by auto sales up 7.2% and restaurant sales rising 9%. By contrast apparel stores posted an average 2.3% gain while general merchandise stores including Wal-Mart and Sam’s Club rose by 0.4% from a year ago.
Home improvement big box giant Home Depot reported a 7.1% rise in U.S. same-store sales for the first quarter. Wall Street analyst Brian Nagel with Oppenheimer & Co., said Home Depot’s “better-than-expected earnings and revenue numbers show the consumer is spending more and more on their home after a harsher-than-usual winter.”
He said the benefit of lower gasoline prices takes a while to show up in the economy and the first shift in spending looks to be toward home improvement along with food and experiential dining.
Fitch Ratings predicted last fall that home improvement projects would grow by at least 6% this year thanks to gains in home prices. Fitch said the home improvement market would grow as homeowners, while somewhat cautious on some fronts, would be more willing to undertake larger discretionary projects and purchases.
SALES GROWTH
Home Depot management said that tools, lighting, flooring and appliances all posted solid sales gains in the recent quarter from its consumer segment. It’s not just the big boxes benefiting. Brent Hanby with local home flooring and lighting supplier Encore Flooring & Building Products in Springdale said the present housing environment is good for everyone including suppliers.
He said his company is so encouraged by the Northwest Arkansas economy that it will soon expand its product selection and open a new lumberyard at the 21-acre former National Home Center facility at 1106 N. Old Missouri Road in Springdale.
Encore has mostly sold flooring, fixtures and lighting since it opened in Springdale more than four years ago. But given the rise in new housing starts and add-on renovations Hanby said they will sell lumber, plywood and related products in the new facility that will compliment their existing store on located on south Thompson Avenue in Springdale.
“We are currently taking applications for drivers and lumberyard employees. We are going to operate the new facility as a ‘STICK YARD’ but not operate the retail store portion of that facility at this time,” Hanby said. “We might try to sublease the retail space as well as some warehousing that we don’t need.”
Hanby said population growth in the region and a short supply of homes relative to demand is likely to push home values even higher in the near future.
“We all can agree that the housing pace of 2004 to 2008 wasn’t sustainable and we don’t need that pace again now. We just need ... slow, steady growth which is best for everyone related to the housing market,” he said.
HANDYMAN HELP
Steve Langton, franchise owner of Handyman Matters in Rogers, said this spring has been busier than normal with homeowners wanting more help with home renovations and fixes than in recent years. The local contracting group works by the hour or does complete jobs using a crew of eight craftsmen and one apprentice.
“Home equity is growing and that helps our business,” Langton said. “We have added three craftsman in the past year and need to hire at least one more right now, but they are getting harder to find given all the building going on in the region. We would hire today if we found someone.”
This spring he said the company completed a large kitchen wing remodel which included turning a bedroom into a dining room. He said they build a lot of outdoor decks and do more bath remodels than kitchens.
“This morning I have a crew setting up an above-ground swimming pool. It’s usually a mixed bag of jobs but we are definitely busier these days,” he said. “We also do a lot of drywall repair, some painting and flooring installation. We don’t install carpet, but we do wood, laminate and tile.” he said.
Langton said it’s common for homeowners to purchase flooring or fixtures themselves at retailers, discounters or online and then call for professional installation help.