These Are 'Choppy' Times, But We've Seen Worse, Home Depot's Merchandising EVP Says

By Craig Webb

Billy Bastek, Merchandising EVP, The Home Depot

Uncertainty and affordability are making it tough today for people to spend on new homes and remodeling, but the buildup in home equity should provide the fuel to power future growth once lending rates decline, The Home Depot's Executive Vice President for Merchandising says.

Billy Bastek told several hundred people gathered Feb. 18 for the annual Storehouse Project breakfast in Orlando, FL, that "the industry is holding up fairly well" in spite of America having a 2.9% housing turnover rate compared with a 50-year average of 4.1%.

"It's been a choppy year, but we are nowhere near what we saw in '08 and '09," Bastek said.

Bastek's optimism lies in part from the fact that Americans' home equity now totals $36 trillion, up $16 trillion since 2019. That's on top of $14 trillion worth of mortgages now being paid off. "The housing market is in a terrific state in terms of levered debt" compared with outright equity, he said.

This equity is increasingly likely to be tapped by homeowners as lending rates decline, he said, noting that 45% of the equity that people take out of their homes goes to home improvement. Homeowners also have ever-increasing needs to fix up their homes, as 55% of all homes in America are over 40 years old, up from 42% in 2011.

Meanwhile, turnover should improve with reduced mortgage rates; Bastek estimated that a one-point drop in the current rate, to 5%, would reduce payments on the average home purchase by $900 a month.