Industry leader Michael Neal says policy changes during and after elections should mean lower costs, more accessible financing for home renovations.
PHILADELPHIA, PA / ACCESSWIRE / September 17, 2024 / The U.S. presidential election, just two months away, will change customer trends in the home improvement sector, according to Michael Neal, president of AAA Distributor, an innovator and leader with decades of experience in the industry.
Neal's insight is not only timely but crucial for homeowners and builders considering taking on new projects and are hesitant because of the uncertainty generated by mixed economic data and the elections' potential to bring major policy changes.
"During this election year, we're seeing that while home improvement projects are still happening, customers are opting for smaller, more manageable renovations as they wait for greater economic certainty," Neal said.
"Inflation and interest remain key contributors to this year's turbulence, but the remodel and housing market's pent-up demand is strong," he added. "Once we navigate through the presidential election and see rates come down, we expect the industry will have a quick recovery in the second quarter of 2025."
Customers are already seeing prices drop in home improvement, as inflation has declined to 3%, Neal said, and they soon may see interest rates drop as well. Jerome Powell, chair of the Federal Reserve Bank, hinted in his Jackson Hole Economic Symposium Speech that the Fed will soon reduce interest rates significantly. And a survey of leading economists predicts the Fed will cut rates by three-quarters of a percentage point by the end of 2024, to 4.5% -- a significant boost to the economy and to home improvement, Neal said.
While the Fed's action targets only the rate at which financial institutions borrow money, it has a profound effect on mortgage rates and borrowing costs. Lower borrowing costs mean both homeowners and builders alike are better positioned and more likely to finance significant renovations and new projects, Neal said, making projects like updating a kitchen, adding a bathroom, or landscaping the garden much more financially feasible.
Lower rates also have a positive impact on new home construction as homebuyers look to take advantage of more attractive financing options, driving additional demand for contractors and subcontractors.
AAA Distributor is positioned for increased demand when interest rates drop and consumer demand rebounds. "AAA has positioned itself with a strong in-stock position at all three of our locations and has established a strong supply chain network to support our customers' needs and to rapidly expand our market presence," Neal said.
Homeowners may also opt for cash-out refinancing to tap into their home equity at lower rates and finance home improvements at a lower interest rate than other types of loans like personal loans or credit cards.
"Overall, while election years can create temporary dips in retail sales due to consumer uncertainty, these effects are typically short-lived, with spending often rebounding during the holiday season following the election," says Jenya Teplitskaya, Senior Branch Manager at AAA Distributor.
AAA Distributor has positioned itself to assist customers by not only providing top-quality home improvement products but also offering expert advice on how to navigate the complexities introduced by changes in the economic climate. With several flexible financing plans already available, potential rate cuts serve to make home renovations more affordable and accessible to an even greater number of homeowners.
For more information on AAA Distributor, please visit https://aaadistributor.com.
About AAA Distributor
AAA Distributor is a distributor, wholesaler, and retailer of kitchen, bathroom and flooring home improvement and remodeling products. Headquartered in Philadelphia, its large showroom (120,000 square feet) in Philadelphia offers samples, displays, and free 3D design services with the assistance of 12 full-time interior designers.?AAA designs and imports its own proprietary product line, LessCare, which includes cabinetry, vanities, bath furnishings, plumbing supplies, flooring and fixtures.?AAA Distributor also has locations in Atlanta, Dallas and Spokane.?
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SOURCE: AAA Distributor
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