Slippery Rock Gazette

Robert Isler

The story for this year keeps getting stronger, although with the understanding that the current rate of growth is not likely to be sustainable for the longer term. For now, though, based on the recent update of NKBA’s 2021 Kitchen & Bath Market Outlook, the industry is firing on all cylinders. The 21 percent overall growth translates into $171 billion for the year, $30 billion ahead of last year. Just as impressive — this new number is a healthy 8 percent higher than the original forecast submitted in late December.

The upward revision is across-the-board in nature. New construction K&B spending is expected to climb 28.5 percent year-over-year, while the remodeling segment is suggesting a 12.5 percent increase. In the initial report, those numbers projected growth of 22 percent and 10 percent, respectively.

Kitchen spending (new construction + remodel) is now targeted at $81 billion, and bath, $89 billion — both more than 20 percent above last year and appreciably higher than the initial forecast.

So what factors are contributing to this red-hot market? It’s a continuation of a positive perfect storm that began in the second half of last year and hasn’t let up — all related in one way or another to the pandemic. First came the buildup of savings, as homeowners experiencing the unknowns of the COVID-19 lockdown decided to err on the side of caution. Much of it wasn’t voluntary, as spending on dining, entertainment, travel and leisure came to a screeching halt. Adding to the dramatic savings growth were the generous government stimulus programs that poured $5 trillion into the hands of consumers. As homes suddenly began doubling as schools and offices, configuration changes practically became mandatory. The kitchen morphed into the family hub and previous health and wellness trends for both bathroom and kitchen accelerated in  urgency. And, all that extra time at home made more homeowners realize a makeover was badly needed.

Add to that record low interest rates that have made home-related loans very attractive, and steep home appreciation with demand far outstripping supply, and all the elements have neatly fallen into place. In fact, there’s usually a strong correlation between rising home prices and the willingness of homeowners to undertake higher-end renovations. The updated 2021 Outlook bears that out. While significant YOY gains are expected for all price ranges of K&B remodeling, it’s the high-end that shines. In the initial 2021 forecast, the top tier was expected to grow by nearly 20 percent over 2020, similar to the spike for mid-level projects. That top-range number has now been revised upward to 28 percent higher than last year, with the mid-range now expected to best 2020 by 21 percent and low-end by just under 13 percent. When it will begin to cool off is subject to debate, but for now, fabricators should enjoy the boost!

Key Takeaways From the Report:

• Industry revenues continue to be revised upward. The latest forecast, calling for $170.9 billion, is almost 8 percent higher than the initial 2021 estimate, and over 21 percent above the $140.8 billion for 2020.
  
  
• High-end projects are leading the growth. While small and mid-level projects are increasing, the highest levels are surging, and are now expected to exceed 2020 by 28 percent versus the initial forecast of just under 20 percent.
  
  
• More homeowners plan to increase their home improvement discretionary spending than that of any other category. Specifically, 30 percent plan to boost spending for home remodeling versus 20 percent or less for eating out, entertaining, travel or health.
  
  
• Kitchen and bath projects are extremely popular, and rank Number 1 and Number 2 in 2021 home improvement plans among a dozen home areas offered. Fifty-five percent who plan a remodel will be doing so for their kitchens, 40 percent for their primary baths, with exteriors, patios/decks and primary bedrooms rounding out the top five at lower levels.

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