Kitchen/Bath Industry Outlook
The kitchen and bath industry is likely to remain in relatively good shape in 2008 compared to other segments of the construction industry, if some conditions hold true. Remodeling is still strong, making up the bulk of the market. Dipping home values spur kitchen and bath remodeling; consumers trying to sell improve their homes in the hope of attracting buyers, and consumers staying put improve their homes for an enhanced lifestyle and increased home value. The trailing edge of the baby boom generation is still at prime remodeling age, while the echo boomers are beginning to form households.
Cocooning, the phenomenon that has people retreating into their homes, is in full force (and is likely to intensify as the economy worsens) spurring the desire for a better kitchen and bathroom. Kitchen and bath products and design options have more visibility than ever, thanks to the media and the Internet, and that visibility fuels consumer desire. Another factor that's driving bath remodeling specifically is the continuing decline of one-income households, which causes two people to share a bathroom at the same time.
As we provided last year, the National Kitchen & Bath Association's Kitchen/Bath Industry Outlook (K/BIO) will offer two forecasts for 2008, an optimistic, or "soft landing" and a pessimistic, or "hard landing."
If inflation remains low, if increases in the unemployment rate remain modest and if the ripple effect of the mortgage crisis remains relatively contained, remodeling should see only minor disruption and the total kitchen and bath market should see only a small downturn.
Our "hard landing" scenario sees housing starts slumping even further, to below 1.1 million, compounded by a serious national recession on the level of the early Reagan years.
To download a free copy of the executive summary and ordering information, click here.