Big Hike In Remodeling Activity Predicted
Homeowner Spending Expected to Surge
Remodeling activity among homeowners is expected to pick up dramatically, according to the Joint Center for Housing Studies of Harvard University.
Home improvement and repair expenditures are projected to reach 8.0 percent, well above the historical average of 4.9 percent, by the start of 2017.
And the JCHS says this trend should continue through all of next year -- at a minimum.
The JCHS is basing its prediction on its Leading Indicator of Remodeling Activity (LIRA), "which provides a short-term outlook of national home improvement and repair spending to owner-occupied homes."
LIRA calculates the annual rate of change in spending for the current quarter and subsequent four quarters. The JCHS said it also identifies "future turning points in the business cycle of the home improvement and repair industry."
Each LIRA is released in the third week after each quarter's closing, and the next LIRA is due to be released on Oct. 20.
"A healthier housing market, with rising house prices and increased sales activity, should translate into bigger gains for remodeling this year and next," said Chris Herbert, managing director of the JCHS. "As more homeowners are enticed to list their properties, we can expect increased remodeling and repair in preparation for sales, coupled with spending by the new owners who are looking to customize their homes to fit their needs."
"By the middle of next year, the national remodeling market should be very close to a full recovery from its worst downturn on record," said Abbe Will, research analyst at the JCHS. "Annual spending is set to reach $321 billion by then, which after adjusting for inflation is just shy of the previous peak set in 2006 before the housing crash."
Through its research, education, and public outreach programs, the JCHS allows leaders in government, business, and the civic sectors "to make decisions that effectively address the housing needs of cities and communities." The JCHS adds: "Through graduate and executive courses, as well as fellowships and internship opportunities, the Joint Center also trains and inspires the next generation of housing leaders."
HomeAdvisor: Remodeling Jobs Already Way Up
HomeAdvisor helps consumers find contractors for remodeling projects, and says the pace of home remodeling activity is already much higher.
"Multi-room remodeling requests are up 67 percent versus this time last year," HomeAdvisor said on its website. "Requests for whole-kitchen, whole-bathroom, or whole-house remodeling are up sharply versus a year ago."
HomeAdvisor tracks about 10 million service requests each year, and its research shows that many of the projects being done lately involve long-deferred major renovations.
"Consumers are now leaning more toward what we describe as 'nesting is investing,'" HomeAdvisor said. "With home values moving upward, consumers have gained further confidence that their home is a good place to invest their money."
NAHB Predicts Only Slight Increase
"Overall, remodelers are reporting steady work in the second quarter," said Tim Shigley, 2016 remodelers chair for the National Association of Home Builders. "With an increase in calls for bids, we should see the market pick up slightly moving forward."
The NAHB's Remodeling Market Index (RMI) posted a reading of 53 in the second quarter of 2016, a drop of one point from the previous quarter.
But it is still the 13th consecutive quarter with a reading above 50, the NAHB said.
A reading of 50 or better on the RMI means more remodelers are reporting higher market activity, compared to the prior quarter. Conversely, anything below 50 means lower market activity.