By One Measure, Remodeling Activity at Record High
Metrostudy, Washington, D.C. said U.S. remodeling activity increased for the 20th consecutive quarter to a record high on its Residential Remodeling Index.
Metrostudy said the RRI Activity Index rose to a record 107.3, up by 4.5 percent from a year ago. The index has posted annual gains above 4.0 percent since the second quarter of 2015 and is forecast to continue doing so through the fourth quarter, before some slight moderation is expected.
The report said all 381 Metropolitan Statistical Areas sampled as part of the study are expected to see year-over-year growth in remodeling and replacement projects in 2017, with average growth of 4.4 percent. This marks the first year since launching the RRI that all 381 MSAs are forecast to see growth.
“The current strength of the remodeling market can be attributed primarily to economics–low mortgage rates, strong existing home sales, the bull stock market run, good job gains and now more recently, wage gains,” said Mark Boud, Chief Economist with Metrostudy. “Yet, as the economic cycle matures over the next few years, rates increase and full employment translates to less robust job growth over time, demographic trends will play a bigger role in driving demand for remodeling.”
Boud noted baby boomers will continue retiring and aging in place as they have been, while Millennials will be increasingly maturing in their life stages–jobs, dating, marrying (or not marrying), buying a home, and choosing to remodel that home. “And, with housing affordability an issue in many markets across the country, Millennials will be more inclined to purchase older, more-affordable existing homes that will necessitate renovations,” he said. “Demographics will matter greatly to remodeling over the next few years as the economic cycle matures.”
Metrostudy defines “activity” as home improvement and replacement projects, but does not include maintenance or projects of less than $1,000. An index above 100 indicates a level of remodeling activity higher than the level of activity at the beginning of 2007, which was the peak of remodeling activity in the prior decade.
Last month, the Joint Center for Housing Studies at Harvard University said strong gains in home remodeling and repair activity are expected to ease moving into next year. The Leading Indicator of Remodeling Activity projects annual growth in home improvement and repair expenditure this year will remain above its long-term trend of 5 percent, but will decline steadily from 7.3 percent in the first quarter to 6.1 percent by the first quarter of 2018.
Earlier this month, the National Association of Home Builders reported the past five years have seen increases in the number of remodelers engaged in aging-in-place home modifications and home owner awareness of these types of remodeling projects. Its survey said 80 percent of remodeling companies are doing aging-in-place projects, up from 68 percent in 2013. Remodelers reporting that “most” of their customers were familiar with the aging-in-place concept increased from 11 percent in 2013 to 17 percent in 2016.
NAHB said top aging-in-place remodeling projects that saw the largest increases since 2013 were: Added lighting/task lighting increased 12 percent; curbless showers increased 9 percent; grab bars increased 7 percent ; non-slip floors increased 7 percent; and widening doorways increased 5 percent. More complex and costly projects saw minor decreases in popularity since 2013. Adding an entry-level bedroom dropped one point to 33 percent, and installing ramps or lowering thresholds decreased two points to 49 percent.
