2020 Kitchen & Bath Market Outlook-September Update- NKBA
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2020 Kitchen & Bath Market Outlook —September Update—
About This Report The National Kitchen & Bath Association commissioned the highly regarded John Burns Real Estate Consulting company (JBREC) to produce this kitchen and bath industry report. In addition to quantifying the overall size of the kitchen and bath market, this analysis reviews current housing industry factors and consumer behaviors impacting 2020 industry growth. JBREC’s analysis employed research from a wide variety of sources: (1) secondary research (e.g., U.S. Census American Housing Microdata, National Apartment Association (NAA) Spending, National Association of Realtors, Moody’s Analytics, Home Innovation Research Labs (HIRL), (2) home improvement estimates and forecasts from John Burns’ proprietary studies and consultants; and (3) a custom study conducted among 1,048 consumers who recently completed, started, or were planning but who abandoned or postponed a kitchen or bath remodel project. NKBA’s 2020 Kitchen & Bath Market Outlook provides a comprehensive view of the U.S. residential kitchen and bath industry. New construction spending estimates include both single family and multi-family units. Remodeling spending estimates include improvements to both owner-occupied and rental properties. All dollar figures cited in this report include both products and labor (installed costs). In light of the COVID-19 pandemic, this research will be conducted three times per year to continually revise the contents of this report.
Report Contents
Project Motivations /
4 Study Overview 40 Obstacles
5 Executive Summary 48 Project Details and Financing
Impact Of COVID-19 on
8 Industry Size and 2020 Growth 53 Consumer Behavior
Housing Industry Factors
15 Impacting 2020 K&B Growth 59 Appendix:
• Detailed Methodology
• Historical K&B Market Size
Impact of COVID-19 on K&B
31 Project Spending
• Consumer Demographics
Cover Project Designed By: Sarah Robertson, AKBD Photographer: Adam Macchia
Study Overview
Research Purpose Research Objectives Methodology
Provide an objective, thorough The research is designed to: The data presented in this report is
assessment of how COVID-19 and compiled from a variety of sources
+ Determine the current size of the
related economic and housing market including the U.S. Census American
kitchen and bath industry as a
trends are influencing the U.S. kitchen Housing Microdata, National Apartment
whole, as well as by kitchen vs.
and bath industry. This includes changes Association (NAA) Spending, National
bathroom, new construction vs.
in consumer spending patterns, an Association of Realtors, Moody’s
remodeling.
estimate of current market size and a Analytics, Home Innovation Research Labs
forecast for 2020. + Provide growth estimates for 2020 (HIRL) data, and JBREC’s home
based on the macroeconomic improvement estimates and forecasts.
factors underlying the forecasts for In addition, a survey was conducted
Since this research follows a study new construction and remodeling.
conducted in Q1 2020, we have among 1,000+ consumers to better
closely analyzed and identified + Analyze changes in consumer understand the impact of the COVID-19
various quarter-over-quarter shifts in spending patterns, including a pandemic on spending levels.
spending levels, project types, labor forecast of kitchen and bath Respondents break out as follows:
preferences, project motivations and spending by project tier (low
other relevant information to monitor spend, mid spend, high spend).
how COVID-19 is impacting the + Analyze and forecast the impact of
kitchen and bath industry. Homeowners who completed a
outdated home design on kitchen 260
kitchen/bath remodel project
and bath remodeling behavior. Homeowners actively working on a
262
+ Identify specific upgrades that are kitchen/bath remodel project
most sensitive to consumers’ Homeowners who started, but postponed a
268
changing budgets in their kitchens, kitchen/bath remodel project
master bathrooms and guest Homeowners who planned (or strongly
considered) but abandoned a kitchen/bath 263
bathrooms.
remodel project
Executive Summary
Designer: Gladys Schanstra, CKD, CBD
Photographer: Eric Hausman
Executive Summary
The NKBA 2020 Kitchen & Bath Market Outlook – September Update provides a comprehensive review of
current kitchen and bath industry conditions and the macroeconomic factors that are expected to impact the
industry in 2020.
Key findings from this research include:
+ We have revised our 2020 residential kitchen and bath spending forecast upwards based on
improving demand fundamentals in both the new construction and repair and remodeling end-market.
+ Spending on residential kitchen and bath products will now decline 6.1% in 2020 from $148.1 billion
in 2019 to $139.1 billion (compared to our previous expectation of -11.7%). It will be driven by a 3%
decline in new construction spending and a 9.7% drop in kitchen and bath remodeling.
+ Although spending will decline in 2020, record-low interest rates are driving significant demand in the
new home market and shifting lifestyles are inspiring more DIY activity, both of which are helping to
offset a general shift to lower price points and smaller-scale kitchen and bath remodels.
+ The kitchen and bath remodeling industry continues to be impacted by project postponements and
cancellations as of mid-August, well after state-wide stay-at-home orders ended. The industry reports
safety concerns, lack of available professional remodelers, rising project costs and other
financial/budgetary concerns as the primary reason for postponing or canceling their remodeling project.
+ One in two households remain optimistic about resuming their previously deferred project yet this
year, while 30% say they plan to resume their postponed or canceled project at some point next year.
6
Executive Summary
+ Homeowners who have completed their remodeling projects during the pandemic continue to do so
at lower price-points and have been more likely to use do-it-yourself (DIY) labor. In Q2, average
project spending declined 48% to $6,000 from $12,500 in Q1.
+ Low-priced kitchen and bath product spending will outperform all other price tiers, declining only 1%
in 2020 compared to -6.1% across all price points. In contrast, mid-priced spending will decrease by the
greatest amount, -10.1%, as most American consumers broadly shift to more affordable products and
finishes to save money during uncertain economic times.
+ These spending trends represent a clear reversal from overall industry growth of 3.8% in 2019, driven
by growth of 7.5% for remodeling and 0.7% for new construction before the pandemic hit.
+ Prior to the pandemic consumers reported primary motivations for kitchen and bath remodeling were
increasing the home’s value (24%) and personalizing the home’s design (23%). During the pandemic,
however, households report being motivated primarily by repair/replacement needs than by design
enhancement desires.
+ Consumers increasingly cite needing “more functional space” as a primary motivation to
remodel. Not surprising as nine in 10 households who had an adult working from home during Q1 report
they are still working from home “most of the time."
+ An aging stock of homes 40+ years old and outdated designs in homes built or remodeled in the mid-
2000s, however, should drive demand for full-scale kitchen and bath remodeling next year and
beyond. Kitchen and bath designs become outdated after 15 years, with cabinets and faucets being the first
product categories to be outdated (relative to current trends).
+ Homeowners still primarily fund their kitchen or primary bath remodel with cash from their
savings (64%).
7
Kitchen & Bath Industry Size and Growth
Designer: Courtney J. Seavall
Photographer: Stacy Gillespie
2020 Forecast
Projected Growth by Construction Type
Residential Kitchen and Bath Spending 2020 Spending Growth
($ Billions) % change vs. prior year
$139.1 -6.1%
New Construction
$77.1 -3%
Remodel
$62.0 -9.7%
Sources: Census AHS Microdata, NAA, HIRL, John Burns Real Estate Consulting LLC (Pub: Sep 2020)
All dollars include both products and labor (installed costs). Definitions and methodology pertaining to New Construction and Remodeling can be found on page 53.
9
2020 Forecast
Projected Value by Segment
Residential Kitchen and Bath Spending
($ Billions)
$139.2 Kitchens
$62.0
Bathrooms
$77.1
Kitchens
$62.0 New
Construction
$34.5
Remodel
$27.5
Bathrooms
$77.1
New
Remodel
Construction
$34.5
$42.6
Sources: Census AHS Microdata, NAA, HIRL, John Burns Real Estate Consulting LLC (Pub: Sep 2020)
Notes: All dollars include both products and labor (installed costs). Definitions and methodology pertaining to New Construction and Remodeling can be found on page 53.
102020 Forecast
Projected Value by Segment
Residential Kitchen and Bath Spending 2020 Spending Growth
($ Billions) % change vs. prior year
Kitchens
$62.0 -12.1%
Bathrooms
$77.1 -0.5%
Sources: Census AHS Microdata, NAA, HIRL, John Burns Real Estate Consulting LLC (Pub: Sep 2020)
All dollars include both products and labor (installed costs).
11Kitchen & Bath Activities by Spend Level
$ $$ $$$
LOW MEDIUM HIGH
• Minor "update" • Medium-scale • Major full-service
remodels, often DIY. kitchen and bath remodels, usually
remodels. using a designer
• Low-cost products
and showroom.
often found in new • Products in first or
"starter" homes. second "move-up" • High-end products
homes. in new luxury
• Usually funded out-
homes.
of-pocket. • Partially funded
from cash proceeds • Upgrades financed
from home sale, via bank loan or
investments, etc. HELOC, in addition
to funding from
other sources.
12Spending in Mid-Price Point Segment Will Decline More
Than Low-Price and High-Price Point Tiers
$ $$ $$$
Residential Kitchen and Low-spend Mid-spend High-spend
Bath Spending ($ Billions) Price Point Price Point Price Point
$130.8 $36.8 $53.7 $48.5
-6.1% -1.0% -10.1% -5.2%
2020 Growth
Sources: Census AHS Microdata, NAA, HIRL, John Burns Real Estate Consulting LLC (Pub: Sep 2020)
Note: Low-Spend, Mid-Spend and High-Spend price point estimates were computed using averages based on these project scale definitions: Small scale: $17,700 for kitchens. As a result, the market size estimates for these three price points do not exactly total $139.1 billion.
13Kitchen and Bath Spending was Increasing
Steadily Prior to the Pandemic
Before COVID-19 caused spending to drop in 2020, total residential kitchen and bath spending grew
9% in 2018 and 4% in 2019, with growth in all spend levels.
Residential Kitchen and Bath Spending ($ Billions) by Spend Level
2017 2018 2019 2020
$70
$60
$60 $57 $54
$53
$50 $51 $49
$50 $45
$40 $36 $37 $37
$33
$30
$20
$10
$0
Low Mid High
Sources: Census AHS Microdata, NAA, John Burns Real Estate Consulting LLC (Pub: Sep 2020)
Note: Low-Spend, Mid-Spend and High-Spend price point estimates were computed using averages based on these project scale definitions: Small scale: $17,700 for kitchens. As a result, the market size estimates for these three price points do not total $130.8 billion.
14Key Housing Industry Factors Impacting
2020 Kitchen & Bath Industry Growth
Designer: Janice J. Page, CKD
Photographer: Rob KarosisReal GDP Fell 33% YOY in Q2 on an Annualized Basis
Real GDP – % Change Quarter-Over-Quarter
seasonally adjusted (annualized)
real GDP declined 33% in Q2
See Terms and Conditions of Use and Disclaimers. 16
Distribution to non-clients is prohibited. © 2020Housing and Home Improvement is Leading Economy
Out of the Recession, Just Like the 2002 Recovery
Housing as a percentage
of GDP is now 21.7%
See Terms and Conditions of Use and Disclaimers. 17
Distribution to non-clients is prohibited. © 2020Total Employment Rose to 140M in July, Up 1.8M Jobs from
June; US Employment Still Down 12M From Cycle Peak
Total US Payroll Employment
153M
151M Jobs at Cycle High
149M
147M
145M
143M
141M
139M
137M
135M
133M
131M
129M
2000
2000
2001
2001
2002
2002
2003
2004
2004
2005
2005
2006
2007
2007
2008
2008
2009
2009
2010
2011
2011
2012
2012
2013
2014
2014
2015
2015
2016
2016
2017
2018
2018
2019
2019
2020
Sources: Bureau of Labor Statistics, John Burns Real Estate Consulting, LLC (Data: Jul-20, Pub: Aug-20)
See Terms and Conditions of Use and Disclaimers. 18
Distribution to non-clients is prohibited. © 20206M People Have Dropped Out of The Labor Force Since February –
2M Retiring and 4M Likely “Staying Home With The Kids”
Population Aged 16+ Not in the Labor Force
104 M 103 M
102 M
102 M
100 M 101 M
100 M
98 M
97 M
96 M
95 M
94 M
92 M
90 M
Nov-19
Dec-19
Jan-19
Jun-19
Jan-20
Jun-20
Aug-19
Sep-19
Jul-19
Jul-20
Apr-19
Apr-20
Oct-19
May-19
May-20
Feb-19
Mar-19
Feb-20
Mar-20
Sources: Bureau of Labor Statistics, John Burns Real Estate Consulting, LLC (Data: Jul-20, Pub: Aug-20)
See Terms and Conditions of Use and Disclaimers. 19
Distribution to non-clients is prohibited. © 2020Primary Homeowner Cohort (Aged 35 to 54) Have Lower
Unemployment Rates Relative to Historical Avgs Than Young Workers
July 2020 Unemployment Rate vs. Historical Average by Age
Historical Average July Unemployment
22%
20% 19.3%
17.9% 18.3%
18%
16%
14% Younger workers, who typically rent,
have been hit much harder by
12% 11.4% layoffs than those aged 35 to 54.
10.3%
10% 8.8%
8.1% 7.8%
8%
6.3%
6% 4.8%
4.2% 4.0%
4%
2%
0%
16-19 years 20-24 years 24-34 years 35-44 years 45-54 years 55+ years
Sources: Bureau of Labor Statistics, John Burns Real Estate Consulting, LLC (Data: Jul-20, Pub: Aug-20)
See Terms and Conditions of Use and Disclaimers. 20
Distribution to non-clients is prohibited. © 2020Low-Income Sectors Like Leisure/Hospitality and Retail
See More Job Losses Relative to Higher Income Sectors
Cumulative Q2 Job Losses by Employment Sector
Leisure and HospItality -19.4M
Education and Health Services -5.5M
Professional Business Services -5.4M
Retail Trade -5.3M
Government -3.4M
Manufacturing -3.2M
Other Services -3.1M
Construction -2.0M
Transportation and Warehousing -1.5M
Wholesale Trade -1.0M
Information -795K
Financial Activities -433K
Mining -317K
Utilities -292K
-25 M -20 M -15 M -10 M -5 M 0M
Sources: Bureau of Labor Statistics, John Burns Real Estate Consulting, LLC (Data: Jul-20, Pub: Aug-20)
See Terms and Conditions of Use and Disclaimers. 21
Distribution to non-clients is prohibited. © 2020Most US Job Losses Have Been Temporary; Permanent Job
Losses Thus Far Up Only 1.6 Million from Pre-COVID Level
Temporary Job Losses Permanent Job Losses
Employed but not at work for "other reasons" Temporary Layoff
30 M 30 M
26.1
25 M 25 M
8.1 20.8
20 M 20 M
5.4
15 M 13.4 15 M
11.7
2.8
10 M 2.5 10 M
18.1
15.3
5M 4.0 10.6
9.2 5M
2.3 2.9 2.9
1.4 2.1 1.3 1.5 2.0
0.6 1.8
0M 0.8 0M
February March April May June July February March April May June July
Sources: Bureau of Labor Statistics, John Burns Real Estate Consulting, LLC (Data: Jul-20, Pub: Aug-20)
See Terms and Conditions of Use and Disclaimers. 22
Distribution to non-clients is prohibited. © 2020‘Permanent’ Unemployment Low Compared
to Prior Recessions
Permanent Unemployment
11%
10.5%
10%
9%
8%
7.1%
7%
6.5%
5.9%
6%
5.6%
5%
4.6%
4%
4.0%
3.7%
3%
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sources: Bureau of Labor Statistics, John Burns Real Estate Consulting, LLC (Data: Jul-20, Pub: Aug-20)
See Terms and Conditions of Use and Disclaimers. 23
Distribution to non-clients is prohibited. © 2020Small Business Hiring Plans Have Returned to Normal
Small business hiring
plans now above
long-term average
Sources: Bureau of Labor Statistics, John Burns Real Estate Consulting, LLC (Data: Jul-20, Pub: Aug-20)
See Terms and Conditions of Use and Disclaimers. 24
Distribution to non-clients is prohibited. © 2020~1% Lower Mortgage Rates Than 1 Year Ago Driving
Increased Demand for Homes Across Buyer Segments
Lower mortgage rates will drive home prices higher in 2020 as more consumers qualify to buy homes. An estimated
4.5 million additional households will meet criteria for obtaining a $200K mortgage.
National Mortgage Rate Sensitivity
number of households in millions $200k Mortgage $400K Mortgage $600K Mortgage
100
Current Rate: 2.88%
90
Number of Households Who Can Qualify
80
4.5M more
70 households
now qualify mortgage rates are -87bp
60 lower than last year
50
40
30
20
10
0
2.0% 3.0% 4.0% 5.0% 6.0% 7.0%
Mortgage Rate
Source: John Burns Real Estate Consulting, LLC (Data: Aug-20, Pub: Aug-20)
25Applications to Purchase a Home Rebounded to Pre-COVID
Levels in June and July After Severe Initial Decline in April
Purchase Mortgage Application Index
seasonally adjusted weekly values
340
320
300
280
260
240
220
200
180
Jul-18
Nov-18
Dec-18
Jul-19
Nov-19
Dec-19
Jul-20
Jan-18
Jun-18
Jan-19
Jun-19
Jan-20
Jun-20
Aug-18
Sep-18
Aug-19
Sep-19
Apr-18
Apr-19
Apr-20
Oct-18
Oct-19
May-18
May-19
May-20
Feb-18
Mar-18
Feb-19
Mar-19
Feb-20
Mar-20
Note: The index does not capture cash transactions and thus understates actual total home buying activity.
Source: MBA (Data: Jul-20, Pub: Sep-20)
26Share of Loans in Forbearance Has Steadily Fallen Since May;
Re-Hiring Activity Should Drive Share Below 7.2% in Near Term
Loans in Forbearance as % Share of Servicing Portfolio
Fannie Mae and Freddie Mac Total Private label and portfolio loans Ginnie Mae
14%
11.7%
12% 10.3%
10%
10.9%
9.5%
8%
8.6%
6% 7.2%
6.4%
4% 4.9%
2%
0%
15
22
29
Ju 2
Ju 9
Au 26
Ap 2
Ap 9
26
8
Ju 5
Ap 5
Ju 4
Ju 1
28
Ju 7
M 0
M 7
M 4
31
Au t 2
9
M 3
1
1
1
1
1
2
1
1
2
ne
st
ril
ly
h
ay
s
ne
ne
ne
ril
ril
ril
ly
ly
ly
c
h
h
h
ay
ay
ay
ay
Ju
gu
gu
Ap
M
ar
Ju
c
c
c
ar
ar
ar
M
M
M
M
Source: Mortgage Bankers Association (Data: Aug-20; Pub: Aug-20)
27July’s 33% YOY Increase in New Home Starts Reflects the Largest
Increase Since 2015; Kitchen & Bath Installs Lag Starts by 2-3 Months
Kitchen and bath product installations
YOY Burns National Starts Index typically lag starts by 2-3 months
40%
33%
29%
28%
30%
21%
17%
15%
20%
14%
10%
7%
10%
5%
3%
0%
-3%
-3%
-3%
-4%
-5%
-6%
-10%
-7%
-8%
-8%
-12%
-13%
-20%
-17%
-18%
-30%
Apr-20 -30%
-40%
Apr-19
Mar-19
Mar-20
Oct-18
Oct-19
Aug-18
Sep-18
Jan-19
Jun-19
Aug-19
Sep-19
Jan-20
Jun-20
Feb-19
Feb-20
Nov-18
Dec-18
Nov-19
Dec-19
May-20
May-19
Jul-18
Jul-19
Jul-20
*Note: The above chart shows YOY comparisons only for builders who participated in the survey one year prior. For the July su rvey, YOY comparisons include
235 responses.
Source: John Burns Real Estate Consulting, LLC, independent survey of ~23% of all US new home sales, NSA (Data: Jul -20, Pub: Aug-20)
28Record Low For-Sale Inventory Indicates Housing Stock is Set for
Price Appreciation – a Tailwind for Large-Scale Remodels
Existing Home Inventory for Sale Existing inventory = 1.53 mil (-20% YOY)
Historical average* = 2.37 mil
3-month average (non seasonally adjusted)
4.0M
3.6M
3.2M
2.7M
2.3M
1.8M
1.4M
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sources: NAR; John Burns Real Estate Consulting, LLC (Data: Jul-20, Pub: Aug-20) *Historical Average: Jun-82 through current
29Real Income Growth of 6.6% YOY in July Will Drive Increased
Spending on Both Big and Small Remodeling Projects
Real Personal Income (RPI)
YOY % change Real Personal Income Growth = 6.6%
15%
10%
5%
0%
-5%
1984
1997
2011
1981
1982
1983
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2012
2013
2014
2015
2016
2017
2018
2019
2020
Source: St. Louis Fed; John Burns Real Estate Consulting (Data: Jul-20, Pub: Aug-20)
See Terms and Conditions of Use and Disclaimers. 30
Distribution to non-clients is prohibited. © 2020Impact of COVID-19 on
Kitchen and Bath Project Spending
Designer: Dvira Ovadia
Photographer: Valerie WilcoxQ2 Project Statuses Improve; 36% of Homeowners Now Actively
Working on Their Projects, Fewer Canceled or Postponed Projects
Homeowners report in Q2 that most (64%) of the kitchen and bath projects they planned for 2020 have
been either cancelled or postponed as of July 2020, even after most US markets “re-opened the economy”
at the end of May. In Q2, however, the percentage of homeowners actively working on their project nearly
doubled, a strong improvement on a quarter-over-quarter basis.
Status of “Planned Projects” – Q1 vs Q2
100%
8% improvement
90% over Q1 2020 Canceled
80% Canceled 33%
41%
70%
60%
Postponed
50% 31%
40% Postponed
40%
30%
20% 15% improvement Actively Working On It
Actively Working On It over Q1 2020 36%
10%
19%
0%
Q1 2020 Q2 2020
Source: John Burns Real Estate Consulting LLC (Data: Jul-20, Pub: Sep 2020)
Includes homeowners age 24+. ‘Planned a project’ includes those who started their project as well as those who strongly considered a project for 2020 but had to cancel.
32Average Spend on K&B Projects Declined in Q2
Homeowners that remodeled during Q2 spent less overall than homeowners who remodeled during Q1.
Total project spending on active projects in Q2 averaged $6,000 or 48% lower than Q1 average total spending per
project of $12,500. Many consumers report doing more labor themselves (DIY) and selecting more affordable
finishes as deliberate measures taken to bring overall project costs down.
Q1 Average Project Spending Q2 Average Project Spending
$16,000 $16,000
$14,000 $14,000
$12,000 $12,000
$10,000 $10,000
$8,000 $8,000
$6,000 $6,000
$4,000 $4,000
$2,000 $2,000
$- $-
Active Postponed / Active Postponed /
Cancelled Cancelled
Source: John Burns Real Estate Consulting LLC (Data: Apr-20, Pub: June 2020)
Notes: Excludes whole house remodels / other category. Spend levels refer to spending consumers budgeted for 2020 before their plans were impacted by COVID-19.
33Limited Household Finances, Lack of Product Availability
Negatively Impacting Projects in 2020
In addition to projects being postponed and delayed by the pandemic, households that were planning projects
for 2020 continue to cite other negative impacts: more limited budgets/finances (24%), lack of project materials
(21%) and reduced project scope (10%). Yet others reported positives, like more time for DIY work (18%)
and greater involvement in project design/planning (19%).
Impact of COVID-19 on Remodeling Households Included:
Our finances/budget became more limited 24%
Project materials were not available 21%
I became more involved in project design/planning 19%
We had more time to pursue do-it-yourself (DIY) work 18%
Scope of project was reduced 10%
The pandemic motivated us to undertake the project 10%
Source: John Burns Real Estate Consulting LLC (Data: Apr-20, Pub: Sep 2020)
Includes all homeowners whose project was in any way impacted by COVID-19 among those who were actively working on, completed, or who had postponed a project.
3435% of Remodeling Jobs in Q2 Were DIY Projects, Households
Postponing Projects Still Expect to Primarily Use Professionals
The primary labor type of remodeling households in Q2 2020 was DIY (35% of all households actively
working on a project). Twenty-five percent of households did some of the labor themselves (DIY) and relied on a
professional remodeler or a friend/family member for the remainder of the work, while 22% relied solely on a
professional contractor or remodeler for their project. Most households who have postponed their remodel still
expect to use a pro for the entire project (38% of households who postponed a project).
Labor Type by Project Status (Active vs Postponed vs Completed)
Actively working Postponed Completed earlier this year
38%
35% 36% 36%
32%
25%
22%
16% 18% 16% 16%
9%
I will do all the work myself (DIY) I will hire a pro to do all the work A friend or family member will I will rely on a combination of DIY
(not a friend or family member) do all the work for me and a professional or friend/family
Source: John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
3540% More DIY Activity in Q2 than in Q1; 3 Times Higher
Reliance on Friends or Family Members Due to COVID-19
In Q2 there was a clear shift in how households remodeled. Actively remodeling households did more labor
themselves (DIY) and used fewer professional contractors or remodelers than Q1 owner-remodelers. This is
partly attributable to: households not wanting unknown trades in their home over health concerns, households
deliberately choosing to DIY to save money, and the short supply of pro remodelers available in many markets.
Active Remodeling Projects Labor Mix – Q1 vs Q2
35% 35% 34%
25% 25%
22%
18%
6%
Q1 Q2 Q1 Q2 Q1 Q2 Q1 Q2
I will do all the work myself (DIY) I will hire a pro to do all the work A friend or family member will I will rely on a combination of DIY
(not a friend or family member) do all the work for me and a professional or friend/family
Source: John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
36Households Say They Shifted to DIY Over Health
Concerns, Financial Reasons and Timeline Constraints
Households Tell Us Why They’ve Shifted to DIY
“With the coronavirus health risks we decided just to do the replacements ourselves.”
“I don't want strangers in my home during the virus.”
“Due to COVID, we didn’t want people in our home.”
“The new tub, surround, plumbing and tile floor installation needs a contractor because I want it done right, but I
decided I could do the rest to save money. It was the right decision as I work in the airline industry.”
“Originally was going to hire a contractor, but decided it was smart to save $5,000 right now.”
“I wanted to save money because I am worried about the economy so I asked my dad to help.”
“I need to preserve cash right now because my wife stopped working to watch the kids.”
“Labor quotes were over $15,000!! We decided to rely on YouTube to DIY.”
Q1 Q2
“The companies I called never called back and we couldn’t wait forever to do the project.”
“Remodelers are too busy right now and we needed to get a bathroom done for the kids.”
“Couldn’t get a contractor to fit us in so we did it ourselves.”
Source: John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
37Many Consumers Still Express Optimism About Resuming
Deferred Projects – Even Cancelled Ones – This Year (2020)
Many consumers expressed optimism that both previously canceled, and currently postponed kitchen
and bath remodeling projects, would still resume this year. Fully half (50%) of households who postponed a
project plan to resume the project this year, and another 30% of households who deferred their project during the
COVID pandemic plan to restart in 2021. Only 18% of households have no plans to restart or are unsure of future
project timing.
When do you plan to start working on your project again?
All Deferred Projects Postponed Cancelled
35%
30%
25%
20%
15%
10%
5%
0%
July Aug Sept Oct Nov Dec Next Year 2022 No Plans /
(2021) or 2023 Unsure
50% of homeowners who have deferred a remodel project expect
to resume their project before the end of the year
Source: John Burns Real Estate Consulting LLC (Data: Apr-20, Pub: Sep 2020)
Notes: Question was asked only of those homeowners who indicated that their project was impacted by COVID-19.
38Designer Usage Declined During Pandemic
While 37% of homeowners completing projects in the second
quarter of 2020 hired a designer, only 26% of those still actively
We are saving in every area we
working on a project did so. Designers were less likely to be utilized
can right now. We don’t have
across kitchen and bathroom projects alike as households tighten the extra cash for a designer.”
budgets in an uncertain economic environment.
% of Active Projects Involving a Pro Designer % of Homeowners Hiring Pro Designers
Actively working Postponed Completed
80% 74% 40%
70% 35% 37% 36%
34%
60% 30% 32%
30% 30%
50% 25% 26%
40% 20% 22%
19%
30% 26% 15%
20% 10%
10% 5%
0% 0%
Yes No All Projects Bathroom Kitchen
Source: John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
39Project Motivations / Obstacles
Designer: Jaque Bethke
Photographer: John MagnoskiHouseholds Increasingly Motivated by Repair and
Replacement Needs than by Remodel or Design Factors
Among consumers who recently remodeled their kitchen or bathroom, 20% said “to replace worn-out features” was their
primary motivation. Another 15% cited “to repair damage” as their primary project motivation, followed by “update my
home’s design” (14%). Compared to prior quarter, responses show consumers are increasingly focusing on
replacements and repairs than full-scale remodels where updating design, home value creation, and adding luxury
features have typically been the primary project motivations.
Top Reasons Consumers Remodeled a Kitchen or Bath in Q2
25%
20%
20%
15%
15% 14%
13% 13%
10%
6%
5% 4% 4% 4%
3% 3% 2%
0% To replace To repair To update my To increase my To add luxury to To add more To increase To make my To restore my To incorporate To protect my To prepare my
worn-out damage home's design home's value my home functional space energy home easier to home to it's smart home family from home for sale
features efficiency age-in-place original design products Coronavrius
Source: JBREC Online Survey Panel, John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
41Top Obstacles Consumers Face When Remodeling
Prior to the pandemic, more than one-quarter of all homeowners reported that the biggest obstacle they faced
when remodeling their kitchen or bath was ‘‘choosing the right materials or products.” Obtaining funds to start the
project was the next largest obstacle (20%) along with finding time to do the work (20%).
Top Obstacles Consumers Historically Face When Remodeling Their Kitchen or Bath
30%
26%
25%
20% 20%
20%
15%
12%
10%
10% 8%
5% 3% 2%
0%
Choosing the right Obtaining the Finding the time to Finding the right Dealing with Staying within my Learning how to Staying on
materials or funds to start the complete the people to do the unexpected budget do things myself schedule with
products project project job (labor) problems related deadlines
to the project
Source: NKBA/ JBREC Online Survey Panel, John Burns Real Estate Consulting LLC (Data: Nov-19, Pub: Sep 2020)
42Project Cost Increasingly the Main Reason for Cancellations
More than half of households (55%) with cancelled projects report the pandemic remains the primary
reason they were unable to complete their project. Compared to prior quarter, households increasingly
selected cost as the primary reason they were unable to complete their project; 34% of households
selected ‘cost of project outside my budget” as the main barrier to completion vs 27% of households in Q1.
Primary Reasons for Project Cancellation in Q2
Project was delayed or postponed due to COVID-19 55%
Cost of project outside my budget 34%
Timing is bad for other reasons un-related to the pandemic 20%
Dealing with unexpected problems related to the project 12%
Dealing with unexpected problems not related to the project 12%
Decided to focus on improving different part of home instead 12%
Could not find the right people to do the job 9%
Could not get financing 8%
Source: John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
Includes all homeowners whose project was in any way impacted by COVID-19 among those who were actively working on, completed, or who had postponed a project.
43Most Q2 Kitchen and Bath Repair/Remodel Projects Still
Occurred in Homes 40+ Years or Older
There was a noticeable increase in Q2 remodeling activity in homes under 20 years old. Typically, over 50% of
kitchen and bath remodeling activity is done in homes over 40 years old; however, in Q2, there was a clear shift
towards homeowners doing smaller-scale kitchen and bath updates to homes built in the mid-2000s and fewer
large-scale, high-budget remodels typically seen in more outdated/ much older homes.
Q2 Remodels Completed by Age of Home and Project Type
Kitchen Primary Bathroom Secondary Bathroom
50%
40%
35% 33%
29%
30% 27%
25% 24%
22%
20%
20% 17% 16%
12% 11% 13%
10% 8% 8%
0%
< 10 yrs 10 - 20 yrs 20 - 30 yrs 30 - 40 yrs 40 yrs or older
Source: JBREC Online Survey Panel, John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
44K&B Designs Become Outdated After 15 Years
Kitchen and Bath Design Obsolescence Progression
Cabinets Faucets Plumbing Fixtures
< 2 Years Old 3-5 Years Old 6-10 Years Old 11-15 Years Old 16-20 Years Old
0%
0% 0% 0%
-10%
-10%
-20%
-23% -21% -23%
-30% -27%
-40%
-39%
-50% -43%
-60%
-61%
-70%
-72%
-80%
16 to 20 years after kitchens and -79% -78% -80%
-90% baths are installed, 80% of the
-100% design features will have changed
compared to current trends
Sources: JBREC calculations of HIRL data, John Burns Real Estate Consulting LLC (Pub: Sep 2020)
45Cabinets and Faucets are First to be Outdated
Kitchen and Bath Design Obsolescence Progression
Cabinets Faucets Plumbing Fixtures
< 2 Years Old 3-5 Years Old 6-10 Years Old 11-15 Years Old 16-20 Years Old
0%
0% 0% 0%
-10%
-10%
-20%
-23% -21% -23%
-30% -27%
-40%
-39%
-50% -43%
Cabinets:
-60%
Shift from raised-panel to -61%
-70% flat-panel 10 years ago
-72%
-80%
-79% -78% -80%
-90%
-100% Faucets:
Shift away from chrome
over last 15 years
Sources: JBREC calculations of HIRL data, John Burns Real Estate Consulting LLC (Pub: Sep 2020)
46Wave of Outdated New Homes and Remodels from
Early 2000 are Now Eligible for Upgrades
Favorable Tailwinds Housing Starts
for Discretionary
K&B Spending:
• Peak housing starts of 20 Years Peak Housing Starts from
mid-2000s are now 15 Outdated Mid-2000s Outdated
to 20 years old, due for
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
kitchen and bath
remodels.
Big Project Remodels
• Wave of major
remodels in 2005 to
2008, now 12 to 15
years old, will soon
boost K&B demand in Wave of Major Remodels
the next few years. 20 Years from Mid-2000s Due For
Outdated Update
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Sources: John Burns Real Estate Consulting LLC (Pub: Sep 2020)
47Project Details and Financing
Designer: Christopher Hoover
Photographer: Jacob ElliottBig-Ticket Categories like Cabinets, Countertops and
Appliances are Less Likely Upgrades with Smaller Budgets
Kitchen upgrades become less common across all categories when consumers’ budgets fall below $4,000. Big-
ticket items, like countertops, cabinets and appliances generally have the most significant downticks. In Q2,
kitchen upgrades dropped across categories with big-ticket upgrades dropping more than small ticket categories.
Number of Upgrades per 100 Completed Kitchen Remodels
$4000+
100
90
79
80 74
70 61
56 59
60 54 54
49 50
50
40 37 34 32 29 32
30 23 26
19
20 13 11
10 5
0
Paint Flooring Lighting Cabinets Tile Plumbing Shelving Countertops Appliances Smart Home
Tech
Source: JBREC Online Survey Panel, John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
49Small Ticket Upgrades like Flooring, Paint, Tile, Lighting
Common in Q2 as Households Shift to Smaller Budgets & DIY
Upgrades in the primary bath become less common across all categories when budgets fall below $4,500.
Flooring, lighting, countertops and cabinets have the most significant downticks, while the small-ticket item of paint
remains virtually unchanged. Small ticket upgrades remained common in Q2 as households did more DIY.
Number of Upgrades per 100 Completed Primary Bath Remodels
$4,500+
100
90
79 78
80 72
68 69
70
60 54
45 48 48
50 44 44
40 36 35
28
30 23 21 20
20 17 14
8
10
0
Flooring Paint Tile Lighting Fixtures Faucets Bathroom Countertops Mirrored Smart Home
Cabinets Cabinet Tech
Source: JBREC Online Survey Panel, John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
50Small Ticket Upgrades like Paint, Faucets, Flooring Common
in Q2 as Households Shift to Smaller Budgets and DIY
Upgrades in the secondary bath also become less common across all categories when budgets fall below $4,500.
Small-ticket upgrades in secondary baths remain virtually unchanged with larger budgets. In Q2, categories like
paint, faucets and flooring benefitted as households focused on small-scale, DIY-friendly projects.
Number of Upgrades per 100 Completed Secondary Bath Remodels
< $3,500 > $3,500
100
90
80 73 70
70 62
58 57 60
60 54 52 56 55
50
50 43 41 39
40 33
30 22
19
20 15
10 10
10
0
Paint Faucets Flooring Fixtures Countertops Lighting Tile Bathroom Medicine Smart Home
Vanity Cabinet Tech
Source: JBREC Online Survey Panel, John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
51Cash Remains the Primary Means of Financing Kitchen
and Bath Projects in Q2 2020
The primary way consumers funded a kitchen or primary bath remodel in Q2 of 2020 continued to be with cash from their
savings or checking accounts (64%). Coming in a distant second,13% said they primarily paid for their remodel on their
credit card, slightly higher than the Q1 report. This mix overall is largely unchanged from Q1 financing sources.
Primary Source of Project Financing for Projects Completed in Q2
Cash from savings or checking 64%
Credit card 13%
Cash from home refinance 8%
Cash from a work bonus or profit share 8%
Income tax return 7%
Cash from investment liquidation 7%
Cash from an inheritance or gift 4%
Cash from a home sale 4%
Financing through contractor or remodeler 3%
Homeowners insurance settlement 3%
Financing through retailer 2%
Home equity loan or line of credit (HELOC) 2%
Cash from a life insurance policy 2%
0% 10% 20% 30% 40% 50% 60% 70%
Source: John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
52Impact of COVID-19 on Consumer Behavior
COVID-19 Still Has Households Highly Cautious About Their
Lifestyles; Most Continue to Make Major Day-to-Day Changes
Household Sentiment Related to the COVID-19 Pandemic and Lifestyle Changes
58% Cooking all meals at home to
save money and to limit our
time in public spaces.
Time at home has made us
34% aware of all the things we
don’t like about our house. We
want our high-touch areas to
be easy to clean.
My husband and I are both
8% working from home and we are
not sending the kids to school
for safety reasons. We need
We are highly cautious, We are somewhat cautious, We are generally not more functional space.
making major changes to making some limited fearful of the virus
our lifestyle changes to our lifestyle
Source: John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
54Households are Cleaning Kitchens and Baths Often, Limiting
Time in Public Spaces, and Working/Schooling at Home More
Household Sentiment Related to the COVID-19 Pandemic and Lifestyle Changes
Cooking / eating more at home 55%
Disinfect spaces more frequently 46%
Spend more time in the kitchen 45%
Buying / storing more supplies in bulk 30%
Decontaminate mail / packages / groceries more 18%
Spend more time in the bathroom 16%
Use the kitchen to work remotely 7%
Use the kitchen for remote schooling from home 6%
0% 10% 20% 30% 40% 50% 60%
Source: John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
5554% of Households Did Not Have an Adult Working from Home
During COVID, but Most Who Did Still Are “All the Time”
% of Households Working at Home Work from Home Status Now
During COVID-19 Shutdowns
54% Not Anymore
10%
46%
Occasionally
13%
All the
Time
53%
Most of the Time
24%
Yes No
Source: John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
56Amid the Covid-19 Pandemic, 9 out of 10 Households Have No
Plans to Move Anytime Soon but 22% Want to Remodel Soon
Household Sentiment Related to the COVID-19 Pandemic and Lifestyle Changes
We generally like living here and want to stay 71%
We need to renovate our home to feel comfortable staying here 22%
We feel uncomfortable here, but can't move soon 5%
We feel uncomfortable here and plan to move 3%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Source: John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
57Almost Half of Households Report More Interest in Remodeling
Baths (48%) and Kitchens (47%) Today than Prior to the Pandemic
Household Interest in Remodeling by Room Type “Post-Pandemic”
60%
53%
52%
50% 48% 48% 49% 49%
47%
40% 40%
40% 38% 38%
36% 37%
30%
30%
20%
17%
13% 13% 14% 13% 14%
12%
10%
More Less Same More Less Same More Less Same More Less Same More Less Same More Less Same More Less Same
0%
Backyard Bathroom Kitchen Bedroom Living Room Home Office Guest Room
Source: John Burns Real Estate Consulting LLC (Data: Aug-20, Pub: Sep 2020)
58Appendix
Designer: Hannah Hacker, AKBD
Photographer: Caleb VandermeerDetailed Methodology
New-Construction: John Burns Real Estate Consulting (JBREC) analyzed construction costs for new-construction
spending by category within new home kitchens and bathrooms. Homes were segmented by size and price point. Due to
regional differences in home price points, segmentation was conducted by nine census divisions, then rolled up. All
figures include both products and labor (installed costs).
Kitchen and Bath Remodel: Spending values are JBREC calculations from tabulations of U.S. Census American
Housing Survey home-improvement projects microdata, NAA spending (rental), JBREC home-improvement estimates,
and forecasts of single-family rental renovation spending. All values include labor and materials, including all major
elements within kitchen and bath spending (plumbing fixtures, faucets, tile, vanities, countertops, lighting, showers and
baths, etc.).
To better understand project activity in light of COVID-19, a total of 1,048 online surveys were conducted in August of
2020 among consumers inquiring about their household remodel/renovation projects for either kitchen or bathrooms.
• Completed a kitchen/bath remodel project (250 responses total) or
• Actively working on a kitchen/bath remodel project (250 responses total) or
• Planned, or strongly considered, a kitchen/bath remodel project, but abandoned it (250 responses total) or
• Started, but postponed, a kitchen/bath remodel project (250 responses total).
Respondents were equally represented across six noncontiguous U.S. regions as defined below:
• Northeast: Maine, Massachusetts, Rhode Island, Connecticut, New Hampshire, Vermont, New York, Pennsylvania, New Jersey, Delaware, Maryland
• Southeast: West Virginia, Virginia, Kentucky, Tennessee, North Carolina, South Carolina, Georgia, Alabama, Mississippi, Arkansas, Louisiana, Florida
• Midwest: Ohio, Indiana, Michigan, Illinois, Missouri, Wisconsin, Minnesota, Iowa, Kansas, Nebraska, South Dakota, North Dakota
• Southwest: Texas, Oklahoma, New Mexico, Arizona
• West: Colorado, Wyoming, Montana, Idaho, Washington, Oregon, Utah, Nevada, California, Alaska, Hawaii
Source: NKBA/ JBREC Online Survey Panel; n= 1,048 60Residential K&B Spending Overview
KITCHEN BATH ($ Billions)
NEW CONSTRUCTION
Single Family $28B $39B
Multi-Family $6B $4B $77
Owner Repair / Remodel $21B $26B REMODEL
Rental Repair / Remodel $7B $9B $62
$62 $77 $139
Due to rounding, sub-categories do not always exactly sum to the rounded totals.
Sources: Census AHS Microdata, NAA, HIRL, John Burns Real Estate Consulting LLC (Pub: 2020)
61Historical Kitchen and Bath Spending
$
+
2017 2018 2019 2020P
$131B $143B $148B $139B
8.8%
3.8%
-6.1%
Sources: Census AHS Microdata, NAA, HIRL, John Burns Real Estate Consulting LLC (Pub: 2020)
62Consumer Demographics
Age Range
40%
30% 27%
20%
12% 9% 10% 10% 10%
10% 7% 9% 6%
0%
Under 30 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65 or over
Annual Household Income Distribution
31%
30%
20%
13%
8% 7% 9% 9%
10% 6% 7%
3% 2% 3%
0%
≤ $40k $40K - $50K - $60K - $70K - $100K - $125K - $150K - $200K - $250K - ≥ $300k
$49.9k $59.9k $69.9k $99.9k $124.9K $149.9K $199.9K $249.9K $299.9K
Source: NKBA/ JBREC Online Survey Panel; n=1,047; *Indicated Parents and/or Grandparents lived with them full-time.
Notes: Unweighted data shown. Tabulations involving spending estimates were weighted to ensure income distribution matched the U.S. Census Bureau, 2018 ACS.Consumer Demographics
Home Price Ranges Length of Home Ownership
50% 47% 50%
36% 36%
25%
25% 25% 18%
14%
8% 9% 7%
0% 0%
Entry-Level Move-Up 2nd Move-Up LuxuryLimiting Conditions
The conclusions and recommendations presented in this report are based on our analysis of the information available to
us from our research as of the date of this report. We assume that the information is correct and reliable and that we
have been informed about any issues that would affect project marketability or success potential.
Our conclusions and recommendations are based on current and expected performance of the national, and/or local
economy and real estate market. Given that economic conditions can change and real estate markets are cyclical, it is
critical to monitor the economy and real estate market continuously, and to revisit key project assumptions periodically to
ensure that they are still justified.
The future is difficult to predict, particularly given that the economy and housing markets can be cyclical, as well as
subject to changing consumer and market psychology. There will usually be differences between projected and actual
results because events and circumstances frequently do not occur as expected, and the differences may be material. We
do not express any form of assurance on the achievability of any pricing or absorption estimates or reasonableness of the
underlying assumptions.
In general, for projects out in the future, we are assuming “normal” real estate market conditions, and not a condition of
either prolonged “boom” or “bust” market conditions. We do assume that economic, employment, and household growth
will occur more or less in accordance with current expectations. We are not taking into account major shifts in the level of
consumer confidence; in the ability of developers to secure needed project entitlements; in the cost of development or
construction; in tax laws that favor or disfavor real estate markets; or in the availability and/or cost of capital and
mortgage financing for real estate developers, owners and buyers. Should there be such major shifts affecting real estate
markets, this analysis should be updated, with the conclusions and recommendations summarized herein reviewed and
reevaluated under a potential range of build-out scenarios reflecting changed market conditions.
We have no responsibility to update our report analysis for events and circumstances occurring after the date of our
report. This analysis represents just one resource that should be considered when assessing a market opportunity.
65All NKBA market research reports are available through the
NKBA Store at https://store.nkba.org/collections/research
About the National Kitchen & Bath Association
The National Kitchen & Bath Association (NKBA) is the not-for-
profit trade association that owns the Kitchen & Bath Industry
Show® (KBIS), as part of Design and Construction Week® (DCW).
With nearly 50,000 members in all segments of the kitchen and
bath design and remodeling industry, the NKBA has educated and
led the industry since the association’s founding in 1963. The
NKBA envisions a world where everyone enjoys safe, beautiful and
functional kitchen and bath spaces. The mission of the NKBA is to
inspire, lead and empower the kitchen and bath industry through
the creations of certifications, specialty badges, marketplaces and
networks. For more information, visit www.nkba.org or call
1-800-THE-NKBA (843-6522).
KBIS ® and NKBA ® are registered trademarks of the
National Kitchen & Bath Association.
Designer: Sarah Robertson, AKBD
Photographer: Adam MacchiaYou can also read
