Remodeling Activity Poised to Jump
With some homeowners flush again with equity–and more homeowners regaining previously lost equity–key indicators of remodeling activity suggest strongly accelerating growth through the end of 2016 and into 2017.
The Joint Center for Housing Studies of Harvard University, Cambridge, Mass., said its Leading Indicator of Remodeling Activity projects that home remodeling spending will increase by 8.6 percent by the end of 2016 and then further accelerate to 9.7 percent by the first quarter of next year.
Chris Herbert, managing director of the Joint Center, said annual spending for remodeling and repairs is expected to reach nearly $325 billion nationally by early next year. “Ongoing gains in home prices and sales are encouraging more homeowners to pursue larger-scale improvement projects this year compared to last with permitted projects climbing at a good pace,” he said.
Meanwhile, the National Association of Home Builders said its survey of home remodelers suggests whole house remodels and additions are regaining market share. The survey by NAHB Remodelers said whole house remodels increased by 10 percent in 2015 from two years ago; room additions increased by 12 percent; finished basements increased by 8 percent; and bathroom additions increased by 7 percent.
“While bathroom and kitchen remodels remain the most common renovations, basements, whole house remodels and both large and small scale additions are returning to levels not seen since prior to the downturn,” said 2016 NAHB Remodelers Chair Tim Shigley. “Clients want to add more space.”
May is National Remodeling Month.
NAHB said bathrooms topped the list of most common remodeling projects for the fifth time since 2010. Eighty-one percent of remodelers reported that bathrooms were a common remodeling job for their company while 79 percent of remodelers reported the same for kitchen remodels. Window and door replacements decreased to 36 percent from 45 percent in 2014.
CoreLogic, Irvine, Calif. Said an additional one million homeowners regained equity in 2015, bringing the number of mortgaged properties with equity to 91.5 percent, or 46.3 million. More than 4.3 million properties still had negative equity, 19.1 percent lower than in 2014.
However, SNL Financial reported home equity loans and lines of credit declined on the balance sheets of the nation’s largest banks by the end of 2015, as pay-downs of equity lines and balances outpaced new originations. The aggregate balance among U.S. banks and thrifts dropped by 1.5 percent to $533.14 billion.
