Executive Summary
2022 is a transitional year for the home service market. The Total Addressable Market (TAM) grew by an additional $62B, reaching a new high of $657B; however, the rate of growth slowed down from 18% last year to 10% this year.
The explosive growth rate we saw last year as massive portions of consumer spending shifted to the home during the global pandemic has begun to taper off. While this return to market normalcy is expected, periods of dynamic market change are important to understand for two reasons.
- First, elevated growth rates – like the 20% year-over-year growth experienced in 2021 are difficult for any market to maintain regardless of macro conditions: supply chains, product manufacturing, and skilled labor usually lack the capacity to grow as quickly as consumer demand. This means normalized growth rates are to be expected regardless of macroeconomic circumstances.
- Second, a reduction in the rate of growth must not be confused with a reduction in the absolute size of the market. Furthermore, rapid price increases in the form of inflation, the underlying drivers of spending, and changes to consumer sentiment all impact how businesses and investors should understand what the market will look like on a go-forward basis.
Rising interest rates hurt consumer spending and home sales, but higher rates also anchor people into their existing homes and disincentivize moving (which in turn boosts remodeling). Inflation erodes buying power and hurts consumer sentiment, but it also reduces the effective burden of mortgage debt. Rising home prices push new buyers out of the market, but they also pad the wealth of existing buyers in the form of additional home equity.
These dynamics – each competing to shape spending in its own way – are combining with existing long-running macroeconomic and demographic trends that are also having profound impacts on the industry. Family formation, aging in place, consumer preferences for style of living, home amenities, geographic location, and changing technology are all impacting the size of the consumer market, while pressure to innovate, save time, improve efficiency, streamline business logistics, and preserve margin are all sharping the pro side of the market.
This is one of the most dynamic times in the history of the home service industry, and while 2022 is a transition year to a more normal market, what counts as ‘normal’ remains unprecedented.
Mischa Fisher
Chief Economist, Angi Inc.
Key Takeaways
- The total addressable market for home services is $657.4B
- The home improvement market is $475B and grew 26% in the past year.
- The size of the market in total project volume is 665.6M projects completed annually, with year over year increases in both improvement projects and emergency projects.
- The total home service market serving single family houses is $500.2B
- Home equity gains of 7.6 trillion over the past 2 years could pay for 12 years of consumer spending at the 2022 level.
- The number of home service pros is 6.1 million people working for approximately 2.5 million businesses.
- The total housing stock is continuing to rise to a total of 143 million housing units, including 93.5 million single family homes, which remain Americans most popular way to live. The average age of the housing stock continues to rise, to an average of 47 years.
- The ratio of the prior year’s home equity to the current market size is 38:1, a 6% increase from 2021, despite the larger TAM this year, reflecting the role of large home equity gains in fueling home service spending.
- The population now has an average age of 39, and the next decade will be marked by Millennials continuing to form families and age into their 40s while Boomers enter their 80s with many opting to age-in-place.
- Home equity gains coupled with rising interest rates will increase the competitive position of remodeling vs. moving, as the total cost of buying a new home has nearly doubled since 2020.
Topline Market Size
| Market Size | Project Volume | |
|---|---|---|
| Total Addressable Market (TAM) | $657.4B | 665.6M |
| Home Improvement Market | $475.0B | 152.5M |
| Home Maintenance Market | $105.9B | 419.7M |
| Home Emergency Repair Market | $76.4B | 93.5M |
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