'Healthy' Growth Forecast in Remodeling, Repair Market
Harvard Researchers Predict Trends Through 2025
The residential remodeling market, which includes spending on improvements and repairs by both homeowners and rental property owners, is forecast to increase 2.0 percent per year, on average, through 2025, the Joint Center for Housing Studies of Harvard University reports.
In a JCHS study called Demographic Change and the Remodeling Outlook, the home remodeling and repair market hit an all-time high of $340 billion in 2015, which broke a spending record set in 2007. The predicted 2.0 percent annual rate of growth would be just below the average pace posted over the past two decades.
The JCHS said it expects to see "healthy growth" in the remodeling industry through 2025.
Baby boomers have led home improvement spending for the past 20 years, and the JCHS said this trend is likely to continue.
"Older homeowners will dominate the remodeling market, as they make investments to age in place safely and comfortably," the JCHS reports.
"Expenditures by homeowners age 55 and over are expected to grow by nearly 33 percent by 2025, accounting for more than three-quarters of total gains over the decade. The share of market spending by homeowners age 55 and over is projected to reach 56 percent by 2025, up from only 31 percent in 2005."
Millennials will also drive much of the growth in spending in the years ahead, but not to the same degree as baby boomers. Instead, the JCHS said spending by people in this demographic group is predicted to "supplement" the home improvement and repair market.
"Although slower to move into homeownership than previous generations, millennials are poised to enter the remodeling market in greater force, buying up older, more affordable homes in need of renovations," the study reports.
"With national house prices rising sufficiently to help owners rebuild home equity lost during the downturn, and with both household incomes and existing home sales on the rise, we expect to see continued growth in the home improvement market," says Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies.