| The home improvement and remodeling industry will be | | | | carbon footprint with better insulation and appliances |
| the darling of the housing sector in 2010. The plunge by | | | | that consume less energy. Upgrades to heating and |
| the housing sector took the home improvement | | | | cooling systems will also be part of the new rules. |
| industry with it as it fell more than 30 percent from its | | | | As the economy struggles to generate enough jobs, |
| peak in 2007. It looks like the home improvement | | | | the President and the Congress may create another |
| industry will bottom in the first quarter of 2010 and then | | | | jobs stimulus bill. This new bill is likely to have money |
| rise from there. | | | | for home improvement such as insulation, window |
| As homeowners recover from the devastation of the | | | | coverings new windows, low energy use appliances, |
| credit crunch, they are looking to increase their | | | | etc. to create jobs and reduce the carbon footprint of |
| spending on their existing homes. Should existing home | | | | a home. |
| sales rise, it will add to the spending by homeowners | | | | Finally, should the sale of existing homes rise, the new |
| on up grading their homes. Even the growing number | | | | owners will spend more on improvement projects. |
| of foreclosures will contribute to the home | | | | Many new homeowners complete some improvement |
| improvement and remodeling industry as the new | | | | project within the first six months of their occupying |
| owners spend some money to increase the value of | | | | the home. |
| their new purchases. | | | | Investing Opportunities |
| Harvard University’s Joint Center for Housing | | | | This spending will drive up the sales of suppliers and |
| Studies expects homeowners to spend $104 billion at | | | | manufacturers of home improvement products. |
| an annualized rate in the first quarter of 2010. From | | | | Investors should look to the home improvement |
| that low point in the current cycle, they are looking for | | | | retailers and manufacturers of housing materials from |
| spending to rise to $110.9 billion by the third quarter of | | | | paint to appliances and tools. |
| 2010. Moreover, the Center expects year over year | | | | Home Depot and Lowes will benefit as remodeling |
| growth by the end of 2010 and into 2011. | | | | contractors and homeowners increase their purchases |
| | | | | of lumber, sheetrock, paint, cabinets, and appliances. |
| Drivers for Increased Spending | | | | With the revitalization of Home Depot, the company |
| Many homeowners are planning catch-up as they | | | | should see margins improve as sales begin to climb. |
| begin improvement projects they postponed earlier. | | | | Suppliers of tools like Black and Decker, and Stanley |
| Projects will cover the scope from painting a room to | | | | should see their sales turn up as well. Paint supplier |
| a total remodel of the kitchen. In each case, | | | | Sherwin Williams, fastener manufacturer Fastnal, and |
| homeowners will spend more money to upgrade the | | | | structural manufacturer Builders First Choice will benefit |
| value of their home. | | | | as well. |
| The growing number of foreclosures is contributing the | | | | Even the housing sector Exchange Traded Funds |
| higher spending on home improvements. Many | | | | (ETFs) such as the Home builders SPDR (XHB) could |
| foreclosed homes are in disrepair and require | | | | see an up trend, though they have a substantial holding |
| substantial improvements to make them livable. The | | | | of home construction firms that will continue to struggle |
| new owners will be spending substantial sums to bring | | | | in 2010. |
| the homes up to code and to improve the value of the | | | | Buying into the home improvement sector at the |
| property. | | | | bottom is a low risk opportunity that should pay off in |
| Should the Cap and Trade bill pass as it now stands, | | | | 2010 and 2011 as homeowners spend on their most |
| there will be requirements for homes to reduce their | | | | valuable asset. |