... Mark Ratchford, a business school professor at Tulane University who studies consumer behavior related to home equity, says that a lot of people are doing the calculation in their head, and they are noting that if the cost of borrowing is that high, they just won’t do it. Ratchford says he is among those now feeling the pain as a consumer.
“I need to remodel my kitchen, but when I look at the price and the interest rates, I can’t afford that. I’ll just wait, that is the whole housing market now,” Ratchford said. “People are skipping cosmetic improvements and only doing the work they need to do.”
The high cost of borrowing has squashed the fixer-upper market too.
“Five to 10 years ago, people would flip houses, they would buy properties, do the work and then sell it for a profit, but that is less of a thing now. People are not buying fixer-uppers. The cost of borrowing and doing upgrades has gotten so high they can’t do it,” Ratchford said.
Even when consumers do have home equity or HELOCs available, they aren’t pouring that money into new cabinets. “If you are using home equity, HELOCs, you are not using it for home improvements, you are using it to cover credit card debt,” Ratchford said. ...
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