A strengthening home improvement market may provide a boost to a battered housing sector this year, according to a new study by the Joint Center for Housing Studies at Harvard University.
The study, “A New Decade of Growth for Remodeling,” suggests that after two years of declines from 2007 to 2009, the home remodeling and improvement market returned to growth in 2010, and overall will likely expand from $290 million to $300 million. There’s been increased spending on property improvements by landlords as the rental market has surged, and the report anticipates that homeowner’s lower mobility will translate into increased spending on improvements of the current residences. The report predicts that remodeling expenditures will increase at an inflation-adjusted 3.5 percent average annual rate, below the pace during the housing boom, but sharply recovering from the recent downturn.
“As both the economy and the housing market stabilize, so too will homeowner improvement spending,” says Abbe Will, a researcher with the Remodeling Futures Program.
As homeowner’s income slowly improves, housing prices recover and housing stock ages, homeowners in long-settled metro areas are likely to spend more on improvements. “Metropolitan areas with rising house prices, older housing stocks, higher incomes and home values, and a larger share of upscale remodeling expenditures, such as Boston, San Francisco, and Los Angeles, are well-positioned for an upturn in remodeling activity,” says Eric Belsky, managing director of the Joint Center.
“Lower household mobility following the housing market crash means that in the coming years homeowners will increasingly focus on improvements with longer paybacks, particularly energy-efficient retrofits,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center. “Also, a slowing of migration to traditionally fast-growing Sunbelt metro areas means that, at least temporarily, more remodeling spending will remain in older, slower-growing areas in the Rustbelt and in California.”
