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Why furniture is getting cheaper

  • March 18, 2024

The furniture segment is one of a few to see prices go down lately, according to today’s CPI report. The furniture index fell 3.7% over the last year, and kept slipping last month. And Ikea, one of the biggest furniture retailers in the world, is no exception. The Swedish home store has been cutting prices on budget staples like the Billy bookcase and Kallax storage cubes, and executives say the price rollbacks will continue in 2024 across all markets where Ikea operates.

That weird supply and demand shock of the pandemic hit furniture sales harder than a sleep-deprived person stumbling into the corner of their bed the first morning of daylight savings.

First there was the pivot to working from home in 2020, said Marisa Ortega, a retail analyst at Mintel. Then in 2021 with record low mortgage rates, a lot of people upsized their homes.

“And you know that requires to fill more spaces in your home — more pieces for another living room and another bedroom,” she said.

That intense demand has subsided as mortgage rates have soared.

“If people are not buying houses, there is less need to look for furniture and home decor,” Ortega said.

At the same time, supply pressures like shipping costs have also eased. Most furniture is imported, said Michael Brown, a partner with Kearney Consulting.

“Coming in on ships that were very, very expensive. And that quickly dissipated,” he said.

Brown said Ikea has been uniquely positioned to save thanks to its clean modern designs, which are also more efficient to manufacture and transport.

“There’s not a lot of waste. There’s not a lot of shapes. They’re all pretty straight cuts, you know all connected by similar hardware,” he said.

Transportation and materials make up the bulk of furniture costs, which

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Cash-Out Refis with Holy-Moly Mortgage Rates for Remodeling Projects? Professional Home Remodelers Face New Challenges

  • July 12, 2022

Amid shortages, exploding prices, and long lead times, there are now the new realities of a turning housing market.

By Wolf Richter for WOLF STREET.

Shortages of all kinds, exploding prices, and long lead times have waylaid the construction industry since late 2020 and have grown into a crescendo of disruptions in 2021 and in 2022. We’ve been reporting on it, and homebuilders have been complaining about it in their earnings calls, and commercial property developers have been screaming about it and practically wishing for a recession to end the shortages, price spikes, and delays. It has been a mess.

Professional home remodelers.

And there is another aspect to this: Professional home remodelers, and how they’ve have had to adapt to the pricing chaos and shortages – and what risks they might run into under these conditions, as the housing market has begun to turn amid spiking mortgage rates.

In a survey of professional home remodelers – not DIYers – independent research firm John Burns Real Estate Consulting found that they confront the worst shortages and longest lead times with appliances, windows, and cabinets: 64% of the surveyed professional homebuilders said that it takes over 16 weeks to get appliances. Another 12% said it takes 12-16 weeks to get appliances (in total, 74% said it takes 12+ weeks to get appliances):

Home remodelers said lead times for: 12-16 weeks Over 16 weeks Total over 12 weeks
Appliances 12% 64% 76%
Windows 31% 39% 70%
Cabinets 33% 38% 71%
Doors 28% 23% 51%
Plumbing 21% 11% 32%

 

How they adapt to “the wild housing market conditions.”

John Burns asked the professional home remodelers how they are adapting to “the wild housing market conditions,” and then highlighted the top seven most common responses.

  1. Remodelers are raising prices in response to
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