Remodeling Forecast Say Spending Growth to Slow

The Joint Center for Housing Studies of Harvard University, Cambridge, Mass., said annual gains in homeowner spending on improvements are expected to moderate across more than half of the nation’s largest metropolitan areas in 2019.

The Center’s Remodeling Futures Program said while no major metros are projected to see spending levels decline in 2019, its model projects the pace of spending by homeowners to slow in 29 of the 49 major metros tracked from 2018, with annual growth in improvement expenditures projected to fall to the lowest rate in three years in nearly half (22) of these metros.

“Metros with cooling home prices and sales activity are not able to sustain the same pace of investment in home improvements as in recent years,” said Chris Herbert, Managing Director of the Joint Center for Housing Studies, noting show “especially pronounced” slowing in markets such as San Antonio, Kansas City, Pittsburgh, Buffalo and Dallas.

Elizabeth La Jeunesse, Senior Research Analyst in the Remodeling Futures Program, said despite the broader deceleration, remodeling gains should remain strong and even accelerate through year-end in some areas of the country including Orlando and Las Vegas, “where remodeling permitting, house prices and homebuilding have picked up.”
The report said regionally, strongest growth in 2019 is expected to be among metros in the West, paced by projected growth of 8 percent or more in Sacramento, Denver, Seattle, Tucson, San Jose and Las Vegas.”

Despite the predicted slowdown, Freddie Mac, McLean, Va., said the renovation market has grown by more than 50 percent since the Great Recession ended in 2009. The Joint Center said the U.S. market for home improvement and repairs is more than $400 billion annually, with nearly 80% of the nation’s 137 million homes at least 20 years old and 40% at least 50 years old.

Earlier this week Freddie Mac announced its CHOICERenovation loan offering, which provides homebuyers a choice to purchase a home and finance the cost of renovations with a single-close mortgage. It is designed to help address aging housing supply, support the need for affordable housing and offer renovation, repair, improvement or refinance options to support the increasing demand for cost-effective financing solutions. The Freddie Mac CHOICERenovation mortgage is available immediately to all eligible lenders nationwide.