Most of you probably remember the great housing bubble that ended during the middle of the last decade. Since then, the U.S. has experienced what could only be described as a dismal housing market, in which the current seasonally adjusted annual number of single-family homes sold hovers around 370,000.
The U.S. Census Bureau reports that back in 1994, 1.34 million homes (single and multi-family) were completed, a greater than 10% increase over 1993. This began an upward trend in which the number of houses built each year ranged between 1.3 to 1.5 million through 1998. But it was from 1999 through 2006 when the housing boom really took place. During that time, nearly 14 million homes were built – more than 1.7 million each year.
So the big boom started about 13 years ago. Why is that significant? Because a lot of appliances are about to wear out. According to Appliance Magazine the average life expectancy for refrigerators is 13 years. So that means at one refrigerator per home, 12 million refrigerators will likely need to be replaced between now and 2020. Washers, dryers, dishwashers and water heaters all have similar life expectancies. Add another 48 million combined appliances, and we have a potential replacement opportunity of 60 million. And I almost forgot to add stoves and ranges (which have a longer life expectancy of closer to 16 years) and microwaves (which are closer to 10 years). All told, we could be looking at 75 million unit replacements over the next seven years.
Now consider HVAC systems, which typically last 15 to 20 years. Starting around 2014, we could see a need to replace one to two million HVAC systems each year. And while one can argue about average life expectancies, these once-new items will eventually need to be replaced sooner rather than later. There is no denying the fact the U.S. is about to enter into an extended replacement boom.
It’s important for contractors, retailers, manufacturers and utilities to be ready for the boom with programs in-place to ensure homeowners make the right choices to purchase not only new units, but the most energy-efficient units. Stay tuned for next week’s post on the challenges associated with that — and how to overcome them.