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The Home-Improvement News begins today with a very note worthy article that comes to us from Market Watch who is saying that The American Hardware Manufacturers Association (AHMA) released last Wednesday the first ever AHMA Home Improvement Industry Confidence Index. 

The index which is produced by two surveys is actually two indexes, one on current numbers and one based on the future, both are based on 100 and both come out monthly.  The current situation index for October had 58% of the respondents saying that sales were below total of one year ago, 19% said sales were the same and 24% said sales were better than last year.

The future situation index which is based on two projections, one for six months and the other one for one year had 15% of the respondents expecting sales to be higher, 42% to be the same and 44% expecting sales to be lower in the next six months.

The response for 12-months showed that 42% expected sales to be higher, 34% expected sales to be the same with 24% expecting sales to be lower.

“We are pleased to provide the home improvement industry with this new measure of the state of the industry,” said Timothy S. Farrell, President and Chief Executive Officer of AHMA. “Over time, the AHMA Home Improvement Industry Confidence Index will provide the industry with a reliable overview of important current sales trends and the mood of the industry looking forward both six and twelve months into the future,” Farrell added.

The AHMA Home Improvement Industry Confidence Index results will be released on the first Wednesday of every month and is based on a survey of all AHMA members.

Although this does not sound like a bad idea at first, I really don’t think that we need another indicator telling us just how bad off the economy is.  These indicators along with the media are what cause many of the economy’s problems.

Next, we have an interesting article that showed up in the Niagra Falls Reviews as well as several other publications around the US.  Do-it-yourself home improvement clubs are springing up around the nation.  It seems that the clubs which are being set up by cost conscious members require members to contribute at least one day per month helping other members with home improvements.
 
The clubs which also provide additional help if it is needed are being set up by neighbors to make home improvement work enjoyable.  They seem to be getting quite a bit done.  So far the group featured in this particular article called the Monthly Improvement Collective of Eugene have built retaining walls, installed flooring and installed a fence.   The host couple plans the work and supplies the tools as well as breakfast and lunch.

“I’m somebody who doesn’t particularly enjoy improving my house,” said Lewis Taylor, 35, the homeowner featured in the article. “But when you make it a party with friends, it’s really cool. You do things you never would have done by yourself.”

Great do it yourself idea!

The last article comes to you today from Big News Biz which is reporting that the members only showroom Direct Buy is offering helpful suggestions for those deciding on whether or not they should take on home improvement projects.
 
“To steal a line from Shakespeare, to thine own self be true,” said Sara Shragal, of DirectBuy.  What Direct Buy is saying here is that you have to be able to understand your limits and your ability level before you tackle a home improvement project.  Because this is so difficult to do they have set up several questions that the customer has to answer honestly.
 
Once the customer is then convinced that they are able to do the job, Direct Buy will assist them in getting direct from manufacturer prices on all of the necessary tools and materials.  And if you decide that the job is more than you are capable of they have product specialists and designers to get the job done for you.

Excellent idea! Just like the last article -I am all for DIY, but only if the job matches the ability level of the individual.

The Home Improvement News begins today in Brimfield, Mass. where County Line Farm and Hardware is testing out a new approach in getting business into their store.  Actually, as owner Robert H. Clark put it “funds are tight” and he is hoping that this will help keep him from going under. 

Local officials unanimously approved the license, however it is now pending before the Alcohol Beverages Control Commission which has the final say over all liquor licenses issued in that state.  The store already sells cigarettes and convenience items.

I do and I don’t like this one.  Of course nobody wants to see anyone go out of business, but I do like the idea of having convenience items for sale in a hardware store.  Many times I go in to get something and just wish that the hardware store that I am in carried snack, drinks and whatever I was in the mood for at the end of a long day.  I’m not so sure that alcohol and beer sales will help though.

In Washington, DC, local officials have revealed a plan that aimed at speeding up getting a home improvement permit.   Two kiosks called “Virtual Permit Centers” are being set up at a Home Depot store in northeast Washington.

Residents will be able to submit zoning change applications for new projects such as a deck or fence.  Local officials said that it only made sense being that contractors and do it yourself-ers are always in the store anyways.

I’m giving this one thumbs up.  Anything that reduces or eliminates bureaucratic red tape is good with me.

Last, to quickly touch on the economy, plans to build an 84 Lumber store in Wichita, Kansas have been scrapped.  Just add this one as a victim of the housing slump. Jeff Nobers, vp-marketing and public relations for 84 Lumber Store said that all of the permits were obtained, but that expansion didn’t make sense at the current time.  84 Lumber is the industries third largest chain of lumberyards.

The economy has been the same for at least the last few months - housing slump and a very unstable stock market.  Sounds like the “R” word to me, nothing here that we didn’t know so I saved it for last.  

The Home Improvement News begins today with Vermilion Hardware in Vermilion, Ohio, closing its doors after 150 years.  How many businesses survive the first five or 10 years?  Well, Vermilion Hardware has survived 150, the last 60 with the same owner. The business was purchased in 1946 by Henry and Edna Bailey and is run today by their granddaughter.

It’s sad to see a business shut down, but to be in business 150 years they must’ve been doing something right for a very long time.  I would be very interested to find out more information on this one.  Anyone who runs a business could probably learn something here.

Rochester, Minn. - On Wednesday for men and two women were arrested on charges of check fraud at local home improvement stores including the Home Depot and Menards.  Seems a local resident found a box of blank checks at her door and alerted police when one of the individuals arrived at her home demanding the package.  These checks were later connected to a Menards store where management at the store became suspicious about a check written for $5,000 for several big-ticket items linked to a checking account that had no money in it.

The group which was reported to be homeless had a shopping list for $6,266.89 at Lowe’s and $3754.95 at the Home Depot.  The shopping list also indicated that the group intends to take the items to North Carolina.

What law-abiding person would not be happy to see this group rounded up?  I am also sure that these stores, considering the housing and home improvement crunch are glad to have caught them in the act.

Salt Lake City - Lastly, what addition of The Home Improvement News would be complete without mentioning the economy?  This article comes from the Salt Lake Tribune.  It goes on to say that although buyers definitely have the advantage right now when it comes to purchasing a home, it’s difficult to find the exact right moment.  So, while buyers are taking their time waiting for the market to bottom out, no one can be really sure when that time will come.  And, once it does come it will be too late considering how quickly the market will turn around.

Real estate agents are saying now is a great time to purchase a home because rates are low and buyers are motivated.  Although financing is much tighter, anyone with good credit can still get a loan.  There are also many incentives offered by sellers and home builders.  Yet buyers still play the waiting game, waiting for the right opportunity.

Interesting, seems to be pretty much the same everywhere.  The economy is so unpredictable right now that in my opinion it would be very difficult to say what is the right time for anything let alone purchasing a home.

The Home Improvement News begins today on a positive note again.  A press release from 1888 Press Release said that the Mount Washington Valley Habitat for Humanity in New Hampshire is getting quite a bit of help from one local retailer.

Silver Lake Home Center has been donating $5000 a year to this Habitat for Humanity chapter for the last several years without much fanfare.  The chapter builds one house per year for one needy family with this money equating to 10% of the total cost. In fact, the donations made by Silver Lake Home Center over the last four years matched a recent one time donation by a national home improvement chain.

“They’ve stuck with us throughout these past years. We’ve certainly never had any other organization that stayed with us as long as they have. You have people that come in on one house, but they seem to have the long term feeling for Habitat. This is the fourth house they’ve done with us,” said Robert Magoun, immediate past president of the Mount Washington Valley Habitat for Humanity.

And it doesn’t just stop there Silver Lake Home Center is constantly encouraging heir contractors and suppliers to help Habitat as well.  It was through them that Habitat for Humanity became involved with White Mountain Home Builders Association who every year runs a charitable event where all the proceeds are donated to Habitat.

Silver Lake Home center is owned and operated by Mark and Heather Sherwood and has grown over the years from a small hardware store and lumber yard to a professional resource home improvement center and full service lumber yard.  Yet even through all of the expansion they remain committed to a small store attitude emphasizing customer service on a first name basis.

How can you not feel good about a situation like this?

In other news, CNBC’s Jim Cramer on his Mad Money Lightning Round said Lowes the home improvement retailer is almost a buy.  He felt that Lowes was a solid turn around play as soon as the housing market begins to turn around because they took market share away from local hardware stores.

Lowes stock has taken a significant beating because of the sluggish housing market, but has recently gained some ground on hopes of better housing reports.  They also have better financial numbers than their competitors.  Lowes still expects to have a 1% increase in sales for 2008 as their competition loose an estimated 6 to 7%.

I find this news partly good and partly bad if Jim Cramer is correct.  It would be great to see a large home improvement retailer post an increase in sales, but it troubles me to see it at the loss of market share for the local hardware stores.  And, if it does happen like this, what does that say for our troubled economy?  One segment of a market does well while another suffers?  I have to see this one play out a little more before I make a call.

Lastly, retailers Home Depot and Lowes each posted third quarter gains.  Lowes stock rose 10% while the Home Depot rose 7.  By midday trading on Tuesday Lowes stock climbed to $23.42 per share while Home Depot rose to $25.  Much of the gain was attributed to the higher than average hurricane season.

Although this also seems like positive news I’m not sure what to believe here either.  In the wake of Monday’s worst ever stock market loss and then the making back of most of it on Tuesday, the reports we have been getting for the last few months are conflicting.  I am going to need additional time on this one as well.

Today’s Segment of “The Home Improvement News” begins with some positive news…..finally!  Home furnishings retailer, Bed Bath & Beyond saw net sales rise 5 percent to 1.85 billion for the second quarter as compared to 1.77 billion for the same period last year.  However, net earnings did fall to 119.3 million for the second quarter from 147 million in 2007.

The New Jersey based retailer opened 13 new stores during that period including a second store in Canada.  They currently have 944 stores. 

Even though earnings were down, at least sales were up.  With all the instability in the economy and the way the media portrays it all, it’s just nice to see that things are not completely bleak.

Home Depot is planning to build two new distribution centers.  One will be in Redlands California and the other is slated for Monroe Ohio, both will be approximately 658,000-square-feet in size.  The news came in a press release by distribution center development company ProLogis.
 
“Both Cincinnati and Southern California are strategic distribution markets and we’re extremely pleased to meet our customer’s needs in these locations,” Larry Harmsen, ProLogis managing director and North American head of capital deployment, stated in the release. “We enjoy working with Home Depot in multiple markets throughout North America.”

Home Depot is overhauling it distribution centers towards a fast-flow, “rapid deployment center” format.

This also appears to be good news. Home Depot is building distribution centers and changing the way in which they work.  They are either somewhat optimistic about the changing economy or gearing up to be better prepared to deal with it. Let’s hope that it’s not the later.

Lastly, and I was hoping that we could go 3 for 3 with the positive news.  However, it looks like we are going to have to be happy with 2 out of 3 because home sales did slide again in August.  With a temporary rise in interest rates and the federal government’s takeover of Freddie Mac and Fannie Mae the National Association of Realtors said existing home sales were down 2.2 percent to an seasonally adjusted rate of 4.91 million units which is 10.7 percent lower than the 5.5 million-unit pace of August 2007.

The decline can also be attributed to the increased difficulty in obtaining a mortgage.   The national average commitment rate for a 30 year fixed rate mortgage rose to 6.48 percent in August from 6.43 percent in July, but declined from 6.57 of August 2007.

The national median existing price for homes was also down 9.5 percent in August to $203,100 as compared to $224,400 year ago.

Nothing unexpected here.

The News today begins with our economy.  It seems like every time I write a segment of the “Home Improvement News”, the economy is always at the forefront.  This time the news was good, at least temporarily.  The Associated Press reported that shares of home improvement chains rose with Friday’s news of the federal government’s plan to help out struggling banks.  This was very good for these retailers considering the trouble that they have been in because of the staggering economy and the faltering housing market.
  
Lowe’s Cos. Inc shares rose to $25.19, which is up over $2 since I reported this last week and Home Depot shares rose to 27.99 which is also up from the $26 of last week.

Considering that both companies’ shares were downgraded last week based on the economic forecast as well as the recent economic turbulence, I’m sure both of these companies will take any good news that they can get. However, the outlook does not look good.

In other news The Lumina News reported that three suspects have been arrested and a fourth has been charged with taking money in a home improvement scam in Wrightsville Beach, North Carolina.  The suspects collected over $23,000 for work that they demanded from the homeowner, but never were authorized to perform.

The work was done over the course of several weeks.  Charges include obtaining money/property by false pretense, attempting to obtain money/property by false pretense, possession of drug paraphernalia, an outstanding warrant for a probation violation and driving with a revoked license.

The three were arrested September 10th when they returned to the victim’s home and demanded $7,100.

The other day I wrote a post on “How to Hire a Contractor” because this type of story has also been the news a lot lately.  Please read my post and check out any contractor that you are considering hiring thoroughly.

Last, I have some good news!  Despite all the recent economic problems, a new shopping center is planned for Paso Robles, California.  The Golden Hills Plaza Shopping Center which is currently an empty lot is set to become 300,000sqft. of retail space anchored by a Lowes Improvement Center and a  Bed Bath & Beyond.
 
Many are questioning if now is the best time to build a $70 million dollar shopping center.  Developers however are going with the “if we build it they will come theory” although they still have a lot of space available because Circuit City, Pet Smart, Starbucks, and Chipotle Mexican grill pulled out of the deal. They remain positive because of the commitment by Lowes.

I’m not sure on this one.  It doesn’t look like the best time to be building, yet the developer here is showing a lot more confidence than most.  And, being there is so much negative talk swirling around these days, it’s nice to hear something good even if doesn’t seem like the thing to do.   

In the news the Market Watch reported that Credit Suisse analyst Gary Balter has lowered his ratings on both home improvement giants, Home Depot and Lowes.  Both were downgraded from outperform to neutral. 

He was quoted as saying, “We believe that the stock prices already reflect a stronger recovery and better near-term margins than we believe they can achieve in 2009 or 2010, and we do not see the housing market returning to a state of equilibrium in 2009, 2009 will be another very challenging year for home improvement and earnings will at best be flat, but more important, 2010 will not be a V-shaped recovery.”

Balter did point out how both companies were seeing declining sales even before the slowdown in the housing market.  He also said that they both have more square footage than they needed.

Over the last 5 days Home Depot stock is down about $3 from $29 per share to $26 a share.  Lowes is also down during the last 5 days from $25 a share to $23 per share.

Once again it is the battered housing market that is the issue.  It seems like I am reporting on this with every segment of In the News.  Just last week I wrote that Home Depot earnings had dropped for the last eight quarters while Lowes had dropped for the last four.

Also in the news there was an interesting article in the Baltimore Sun.com.  They had a article  about   how difficult it is to get a home improvement permit in that city.  With long lines and lots of bureaucracy it’s interesting how Baltimore claims to have a 35% reduced wait time on their web site.

The Baltimore Sun did go on to say that although it was busy, staff members on duty were knowledgeable and kept their sense of humor.  Although they have an automated phone system and many forms can be down loaded from the Web the problem arises because each job is different.

With the housing market the way it is, many people are staying put.  They are choosing to renovate versus move and this is what is causing the volume of people applying for permit’s .  I question how many more cities are experiencing the same problem?  You would think that city officials would realize this and take steps to prevent it.

Lastly, Walmart has said that it will donate 2.5 million dollars through a combination of cash and merchandise to the relief efforts of hurricanes Ike and Gustav which recently swept through Louisiana and Texas.  The retailer has said that the donation will be made through supporting the efforts of organizations such as the American Red Cross, the Salvation Army, Feeding America, the Texas Disaster Relief Fund and the Baton Rouge Area Foundation.

“At Walmart, we work hard to provide support to the communities we serve when they need it most,” said Margaret McKenna, president of the Walmart Foundation.

Walmart has already contributed 2 million dollars to help store associates who have had damage to their home as well as individual stores donating supplies to their communities.

Nice job Walmart!

In the News on Wednesday Reuters reported that the Home Depot is pushing every day low prices instead of using gimmicks to get customers into their stores.  With the economy being the way that it is consumers are very cost-conscious.

Chief Marketing Officer Frank Bifulco said in an interview on Wednesday.  “When you look at retailers across the board … the emphasis on price and value, I’ve never seen it as acute as it is now.”

Home Depot earnings have continued to decline for the last eight straight quarters while Lowe’s, their chief rival has dropped for the last four.  Home Depot has said that people are not looking for promotions, they’re looking at prices.  They have even said that some recent promotions have cost them money.

There has been one positive thing about the economy for Home Depot though and that has been that sales of energy related products are up.  They have also said that online sales are up.
 
Home Depot shares closed on Wednesday at $29.10, while Lowe’s fell 42 cents to $25.23.

I can very much relate to this report.  When it costs me $90 to fill up my truck with gas and business is down compared to previous years I don’t really want to get involved in buy one get one, worrying about rebates or anything like that.  I just want a good bottom line price, be it for me or to turn around and give to my customer.  What’s your opinion?
    
In other news The Gazette.com of Colorado Springs is reporting that home improvement contractors are feeling the same pinch as home builders and real estate agents.  Although there still is a good amount of work, consumers are worrying about their ability to buy food and gasoline and the November election.

The National Association of Home Builders says that the same effects are being felt throughout the country except in the Midwest which explains the The Gazette.com’s report saying that many local contractors still have work.  Home improvement has been declining since 2005 and a study by Harvard University suggests that it will continue to decline through 2009.
 
The reason for this is simple, people do not want to invest money in their home while the value is declining.  A lot of people rely on the equity in their home for their retirement and cannot afford to see that amount go down.  The only thing that they invest in this type of economy is necessities such as a new roof or air conditioning.

While some remodeling jobs do not add to the value of a home, some do.  Some will actually make the home more salable which is really what’s most important when you go to sell if you need to get out your equity. 

Sometimes holding off on a home improvement can be a good move, but not always.  It’s true that you worry when your income is low and expenses are high, but to make your home as attractive as possible to potential buyers doesn’t it make sense to fix up at least certain things.  What’s your opinion?

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CNN Money is reporting that Lowe’s home improvement chain had to close 29 stores in the wake of hurricane Gustav on Tuesday.  Store closings occurred in Louisiana, Mississippi and Texas as workers assessed their damage.  Some of the stores had already been closed due to mandatory evacuations.  Currently Lowe’s is saying that they have trucks heading into the region to help the cleanup effort.

CNN is also reporting that Fitch Ratings gave the Home Depot a negative ratings outlook on Tuesday due to the weak housing market.  A negative outlook rating usually means a decrease in the company’s rating sometime within the next 12 months.

Fitch wrote that it expects Home Depot’s free cash flow of about $1 billion to remain strong because of cuts in capital spending. But a possible concern remains that a “correction in the housing market may take longer than expected, which would affect the company’s longer-term sales and operating margins.”

What was interesting was that Home Depot’s chief executive Francis Blake came back and said that the housing market was nearing bottom and only the home improvement sector would remain weak through 2009. 

“We don’t think we’re at the bottom yet, but we think you can see it from here,” Frank Blake told a Goldman Sachs retail conference on Wednesday.

He did also say that profits could go up in the second half of the year, but will continue to be under pressure.  Previously Home Depot said it said that profits could drop as much as 24 percent this year.

Home Depot also said that prices on some of their products such as lumber and copper are beginning to stabilize. Shares of Home Depot rallied Tuesday, ending regular trading up $1.18, or 4.4 percent to $28.07 and again Wednesday, 97 cents, or 3.5 percent to close at $29.04.

So what’s the truth here?  Fitch Ratings said his Home Depot’s outlook is negative because of the weak housing market.  Home Depot says the weak housing market is coming to an end.  All we can do is wait and see.

Lastly, the Tulsa Home Beautiful Show is coming to the QuikTrip Center in Expo Square this Friday to Sunday.  The event is designed to give visitors the ability to create the home they have always wanted by being creative in tackling their own home improvement projects.The show will feature Norma Vally, host of the Discovery Channel’s Toolbelt Diva.

The Town Talk.com which serves the central Louisiana area is reporting that residents are preparing for hurricane Gustav.  Even though some stores are not seeing an increase in traffic others such as Lowe’s have customers waiting as much as two hours.  The Super 1 Foods grocery stores in Pineville says “batteries and water are on everyone’s list” although they have not yet seen canned food sales increase.  This may change as the weather reports come in.  At Lowes, workers were trying to find chairs for customers determined to wait for the next shipment of generators.  Managers at the Pineville Wal-Mart were rearranging work schedules to handle the increased amount of customers.

This hurricane is going to hit and as I write the hurricane has now been upgraded to a category four with winds of 145 mph, let’s just hope that it loses strength and hope that we learned something from hurricane Katrina.

In other news Jim Cramer of Mad Money launched a new segment to show called “In the Ring”.  In this segment he compares to retailers to see which the better one to buy is.  This time it featured Home Depot versus Lowe’s.  He uses the same type of analysis that money managers use to do analysis.  He compared sales in which Home Depot is down 7.2% and Lowe’s is down 5.2%.  He also compared market share as well as potential growth. The last factor that he compared was performance as shown by the dividend yield.  Home Depot actually won this category with 3% as compared to Lowe’s 1%.

Being that I spend quite a bit of time in Home Depot I can certainly understand why the numbers are down.  The biggest problem that I find is finding help, it always seems like the sales associates that I find you not work in the department that I am in.

The Boston Globe published an article saying that two out of three homes are under insured.  It seems to be a common occurrence that people completing large scale home improvements are not reporting it to their insurance agents.  One reason that this is such a big problem is because insurance has changed.  It used to be that you were covered for replacement value, now this is not so.  Now insurers offer replacement cost coverage.  This sounds like the same thing, but it is not.  With replacement cost coverage the insurer will cap the amount that they are willing to pay to about 120 to 125% of the policies cover amount.

This can be a very serious problem considering the amount of replacement costs.