U.S. long way from true housing recovery: Home Depot CEO

by 14 Oct 2012

(TheNicheReport) -- Many large corporations in the United States are eagerly awaiting a return to normalcy in the housing market, but for retailers like Home Depot the recovery may not be coming fast enough. The home improvement chain enjoyed many years of handsome profits during the great American housing boom prior to 2007, but even CEO Frank Blake is careful about being too optimistic about current market conditions.

In an interview with international news agency Reuters, Mr. Blake expressed his belief in a full recovery that may still be two years away. Home Depot has seen some of the fruits of the nascent recovery thanks to increased visits to their stores by contractors and home owners over the last few months. Still, Mr. Blake believes that the housing market sustained deep damage that will take from one to two years to fully recover from. 

The Dark Years: 2007 to 2009

Mr. Blake took the helm of Home Depot in 2007. As the housing bubble lost steam and began its painful deflation, Mr. Blake saw sales figures drop by more than 20 percent in states where the downturn had a deeper impact: Arizona, California and Florida. These are the states where the ongoing recovery has been felt the strongest in terms of price appreciation and demand. Mr. Blake, however, is cautious about these situations since they have been temporary in the past. 

Mr. Blake is not alone in that sentiment. Federal Reserve officials have recently stated their disappointment at the housing recovery, explaining that a stronger rebound should have been felt by now. Mr. Blake does not think that the current credit and lending requirements and the shadow inventory of distressed properties are conducive to a full recovery of the housing market.

Current Growth Strategies

In light of the slow American housing recovery, Home Depot has been looking at different growth strategies. In countries where housing markets are currently bubbling, like Brazil and China, Home Depot’s expansion attempts have not been fruitful. The company is looking at expanding its presence in cyberspace rather than its geographic reach. Until American homeowners return en masse to Home Depot’s iconic big-box stores, the company hopes to cash in on the growth of e-commerce.

COMMENTS

  • by Stan Brody | 10/16/2012 6:18:18 AM

    Two years away... Mr. Blake is being far too optimistic... assuming that the "experts" are correct and there are only 11.8mm underwater homes... really closer to 22mm... and William Dudley of the FOMC is correct that the average amount of negative equity is only $65,000 per home... AND using the HUD actuarial of 4% for appreciation... well then, in President Clinton's words... you do the math... try on no sooner than 2022 for size..

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