Mike Bidwell, CEO and president of Neighborly, joins Cheddar News to discuss homeowners' shifting attitudes toward renovations in their own homes. 

Mike Bidwell, CEO and president of Neighborly, joins Cheddar News to discuss homeowners' shifting attitudes toward renovations in their own homes.&nbsp;

More Homeowners Choosing Renovation Over Moving 

joining us now to discuss this is mike bidwell Ceo and president of neighborly. Thank you so much for being here mike. I gotta ask you why is it a good time to renovate right now? Especially in the middle of inflation? Well there's been a lot of home equity value creation over the last couple of years. Home equity has increased by $7 trillion $80,000. So homeowners feel like they have wealth and if they're thinking about trading up that becomes more expensive on a per square foot basis because of the rise in interest. If you think about going from perhaps a 3% mortgage to a 7% mortgage. So people are choosing to stay in place and make their their current homework. Yeah that's a big financial difference between the two. So what would you say are some of the best renovations are adding value to your home, The kitchen and the bathroom are always good places to start. They tend to return a higher. Have a higher R. O. I. So making those enhancements. They're they're small rooms in the home but high utility. And then if you some people make clothes in the garage if they're needing more space. Um And then there's simpler things you can do to just spruce it up like painting and then they always say curb appeal helped as well. Right. Well. Yeah. Well a recent consumer price index report shows that home improvement and household furnishing prices climb faster than other non house related goods. So what items are you saying higher prices and why aren't these higher prices discouraging homeowners to doing these renovations in the first place? Well we've seen increases in really many of the input materials that go into renovations um you know would spiked up but that came back down. H. V. C. Equipment has become much more expensive. Windows have gone up and of course there's been supply chain issues around many of these that's it's better now but it's not what it was in say 2019. But many of the input products have become, even paint's gone up quite a bit well mike I'm doing some renovations right now so I need your help. How can homeowners save money on home improvements and remodeling projects are doing around the house right now. Well many people are choosing to D. I. Y. And they can go to certainly some of the home centers and get some help what we find usually with these renovation and and by the way you a lot of people youtube and figure out how to get some of these things done. We're in the space of providing homeowners with professional services around the category. What we find is people will often do some of this work themselves but then there are other parts that are more technical that they ask for some help like electrical plumbing, H. G. A. C. And that kind of thing? Yeah it's gonna cost you more if you end up making a mistake trying to do something you don't know how to do. So be careful and get an expert where you can. So what are your housing market predictions for 2023? Do you expect to see, you know the same trend and more home renovations? You think people are gonna calm down and start to buy more homes and get more financing? What do you think we're going to see a dep? We have seen that one of our businesses is home inspection and for pre pre sale home inspection. And we've certainly seen a material decline in that space. But our home services categories had stellar performance over the last couple of years and I think we'll continue to see that. I do think that while people will tend to stay in place and not maybe move up size uh as much as they have over the last couple of years, I do think that's going to normalize a bit. Look there's people are forming families now. Millennials are buying homes and mass buying a home is still the most popular form of housing in this country. And rents have gone up so people are are going to want to continue to buy a home. There's a little bit of shock right now because this has happened pretty quick with the movement interest rates But if you think about what we've had in the last number of years has not really been normal 3% mortgage rates are not normal. Seven is probably closer to, you know, if you look at the long period of time, seven is probably closer to normal. I think about when I bought my first home many years ago, it was 1982, my mortgage was 16%. But we bought a home because we were ready to buy home and we made it work. We have had inflation to help compensate for some of the increase in mortgage rates. I guess we shouldn't complain considering your 17% interest rates there. Well, you know, in 2021 the average cost to do some of these home renovations was anywhere from $10 to $60 per square foot. And talking about your predictions, do you see that staying the same being different? Can we expect it to go down and become more affordable for people to do these renovations? I think we'll continue to see a little inflation next year, but it's not gonna be what it's been over the last couple of years. There's been in the category, as I mentioned, many of the input products went up quite a bit due to supply supply chain issues that's moderated. Um and then we had no wage inflation. There's not enough skilled trades, people in this country and that puts pressure on attracting the labor but I think you'll get an offset from new home starts. So there's a lot of homes that happened started over the last year. As those get finished up, you're going to see some of that labor move into remodeling and home services and that will make that a little more plentiful with regard to labor supply. And so that will moderate the the rate of increase. Um, but it will continue to go up and not at the rate that we've seen. All right, not what I wanted to hear. So I may have to call you if I need some help on my renovation project. Thank you so much. Mike Bidwell Ceo and president of neighborly.