Many players in the kitchen and bath industry, from builders of new housing communities to remodeling firms, report that 2016 was a strong year.
“Buyers spend the bulk of their money on kitchens,” says Jill DiDonna, a senior vice president at Sunrise, Fla.-based GL Homes, the developer of Seven Bridges, a new single-family home project in Delray Beach, Fla., where prices range from the $800,000s to $2 million. “That’s where the biggest part of their spending on options is allocated to.”
DiDonna says that the kitchens and baths at Seven Bridges are already well appointed, with standard features such as 42-inch upper cabinets, granite or quartz countertops, undermount sinks and an appliance package that includes Wolf ranges.
Still, close to 100 percent of buyers at Seven Bridges elect to upgrade their kitchens and baths.
“Buyers believe that they get the most impact for their investment in the kitchen,” says DiDonna. “When people come into your home and you have a beautiful kitchen, it’s a wow. The kitchen provides them with the biggest place to make an impact, so that’s where they allocate the biggest percentage of their spending.”
The kitchen and bath industry is an important part of the U.S. economy, National Kitchen and Bath Association (NKBA) Chief Executive Officer Bill Darcy said at the group’s recent Kitchen and Bath Industry Show (KBIS) in Orlando in January. It represents nearly one-fifth of the total residential design and construction market, which itself is about 2.5 percent of the U.S. gross domestic product.
“Our industry is growing,” Darcy said. “And when NKBA members create kitchens and bathrooms that delight homeowners, we all win because it creates more demand.”
Indeed, according to NKBA, last year American homeowners spent $85 billion to remodel and replace kitchens and baths in their homes. The kitchen and bath market for new construction was $49 billion.
Ninety-five percent of new-home buyers at communities in Chicago by Lexington Homes select upgraded options for their kitchen and bath, according to Jeff Benach, a Lexington principal. Buyers spend approximately $30,000 to $50,000 on upgrades, with roughly 40 percent going toward kitchen and bath, he said.
A new report released by the NKBA at KBIS, “Estimated Market Value for the Kitchen & Bath Remodeling and New Residential Construction Markets,” found that each year, homeowners remodel upward of 10.2 million kitchens — roughly one in 10 of all households — and 14.2 million bathrooms. Annual new-home construction adds approximately 1 million new kitchens and 2.3 million new bathrooms to the marketplace, creating additional opportunity.
“Kitchens and bathrooms are big business,” says Manuel Gutierrez, NKBA consulting economist. “We remain cautiously optimistic on the remodeling outlook simply because the number of houses in the U.S. increases year after year. This drives a constant stream of demand for products and services in the remodeling market.”
But while there was plenty of good news for Darcy to report on in Orlando, he also mentioned that the kitchen and bath industry faces challenges, primarily from the “skills gap.” There are more than 3 million unfilled construction jobs in the United States, he said, offering substantial opportunities for those seeking a vocational education.
To help ease the skills gap, Darcy announced that NKBA has entered into three partnerships to promote “trading up” to vocational careers. The partnerships are with This Old House Ventures (“Generation Next,” to fund scholarships for people pursuing careers as carpenters, electricians, roofers, masons and plumbers through the mikeroweWORKS Foundation’s Work Ethic Scholarship program), SGC Horizon Building Group (launching a skilled labor fund) and ACE Mentor Program of America (to encourage high school students to study architecture, construction or engineering).
Darcy said that the NKBA’s mission is to inspire, lead and empower the kitchen and bath industry. “I’m very optimistic about our future,” he said. “Working together, we can achieve our vision of a world where everyone enjoys safe, beautiful and functional kitchen and bath spaces.”
Robyn A. Friedman is an award-winning freelance writer and copywriter who has been covering the real estate and housing industries for over two decades. She writes the “Jumbo Jungle” column for The Wall Street Journal, is a real-estate and personal-finance columnist for City & Shore magazine, covers celebrity real estate for the South Florida Sun-Sentinel and also contributes regularly to Commercial Property Executive, Multi-Housing News and numerous other publications.