Home Depot at Oppenheimer Conference Notes

Ted Decker

Housing fundamentals are strong

“So we see the overall macro as a positive. Love the job creation in unemployment rate like wages starting to see wages increase, people are getting more spending power, particularly pleased with household formation. So we’ve had 7 or 8 years after the peak of housing six where we were way below historical averages of housing formation which is about 1.2 million units a year. We were in the low hundreds of thousands. So you saw last year housing formation got back up to about that average 1.2 million rate. So that’s obviously good for our business. People moving out and forming households. So that the overall macro is good. And then you get a little more specific in our business beyond housing formation, we see housing turnover starting to get back to that historical average of 4% plus of housing units. So that’s about 5 million transactions and we get bumps in our sales when someone prepares a house for sale as well as when the new owner moves into the house to fix it up the way they want to live in the house. So housing turnover is strong. And then home price appreciation has — we’ve had multiple years now of year-over-year we’re averaging about 5% odd on a reported monthly basis year-over-year house appreciation growth.”

Paul Deveno

Millenials are forming homes

“I think for the longest time it was in great debate. What will this generation do in terms of homeownership. You could certainly see a trend at the time where rental, the household formation, as Ted was talking about earlier, it wasn’t happening. Where was this generation, this millennial going to set their roots. And what we’ve seen is that the cycle essentially was delayed about 6 to 7 years. And right now it’s really starting to come to fruition. And that fruition is as they are now moving into the jobs that they have secured as they are now forming families, as they are now getting their feet underneath them, we’re seeing that formation happen. And we are seeing them move into the homebuying market just as every other generation has.”