The one millennial habit that is ‘music to our ears’
Millennials are facing unique hurdles in homebuying, but the generation may have the right mindset for what it means to be a homeowner, Home Depot Chief Financial Officer Carol Tomé told CNBC Monday.
Thirty-three-year-olds made up the largest group of first-time homebuyers in 2018, and they’re buying with investing in mind, she said.
“They’ve told us through our research, ‘We want to work on our house because we think it’s a good investment,'” Tomé said in a one-on-one interview with “Mad Money’s” Jim Cramer. “So that’s music to our ears.”
Homeowners that think of their dwelling as an investment, as opposed to an expense, tend to spend more money on their home, she said. Home equity values — the difference between property value and what’s owed — have more than doubled within the last decade, and that has helped boost sales at the home improvement chain, she added.
In 2018 alone, homeowners with mortgages caught a more than 8% increase in equity, totaling about $678 billion of excess wealth, CNBC reported. That translates to approximately $9,700 per homeowner.
“People are coming in and doing major projects” such as updating kitchens, bathrooms and basements, Tomé said. “They feel like their home is an investment.”
Home Depot’s own in-house investing is also yielding sales results. The company in 2017 announced a plan to spend $11 billion to better integrate its stores and digital experience. The plan included hiring 1,000 tech team members in part to defend Home Depot’s lead over Lowe’s and stave off competition from Amazon.
Revenue in the company’s latest quarterly report increased 5.7% year over year, totaling more than $26 billion. Online sales alone, which made up less than 9% of revenue, grew 23% in the first quarter of fiscal 2019.
Tomé is set to retire at the end of August after 18 years as chief financial officer.
But her impact could linger for years to come. Tomé said she wants her legacy to be about the employees in the company both in and outside the financial circle.
“When I started 24 years ago I was all by myself. But if you look at our leadership team now you see women in power. We have three executive vice presidents who are women today, and it’s throughout the entire company,” she said. “I am so incredibly proud of them, and I hope they’re proud of me.”
WATCH: Cramer chats with Home Depot CFO Carol Tomé
Disclosure: Cramer’s charitable trust owns shares of Amazon and Home Depot.