Remodeling Poised for Short-Term Growth
With the spring home buying season showing some signs of promise–but with construction still at depressed levels–several reports suggest many would-be move-up homeowners are turning to remodeling in the short term.
Trulia, San Francisco, said its survey of more than 1,300 U.S. homeowners aged 18 and older, conducted online by The Harris Poll, shows most homeowners are planning to remodel their properties, although perhaps not as extensively as remodeling vendors would prefer.
The survey reported most homeowners aged 18-to- 34 (92%) said they would remodel or renovate their home, compared to 81% of homeowners over 65. Alexandra Lee, Housing Data Analyst with Trulia’s Housing Economics Research Team and author of the report, said this is likely driven by the fact that most young homeowners are first-time homebuyers who bought starter homes in need of repairs.
“The spring home buying season is kicking into high gear,” Lee said. “But for some, home buying season may look more like home remodeling season. The tank has been low on inventory for years, and with new construction still sputtering well below pre-recession levels, some homeowners may decide to take matters into their own hands–perhaps not build a new house, but at least remodel their current one.”
However, the survey noted while 90% of homeowners plan to remodel their home at some point, most are putting it off. Only 39% homeowners who plan to remodel will do so within the next 12 months.
The survey also reported of the homeowners planning to remodel in the next two years, 87% would not consider selling their home instead of remodeling and staying in their home. Their top reason to not sell is because they want to stay in their current home (40%) or current neighborhood (28%).
Additionally, of homeowners planning to remodel, 47% are willing to spend $5,000 or less, while 20% are willing to spend over $10,000. Yet, most homeowners want to remodel the kitchen (50%) or bathroom (45%).
The Joint Center for Housing Studies at Harvard University, Cambridge, Mass., reported in its annual Improving America’s Housing 2019 report the home remodeling market in the U.S. expanded by more than 50 percent since the end of the Great Recession. Spending on improvements and repairs to both owner-occupied and rental properties hit a record of nearly $425 billion in 2017.
The report noted with new construction slowly recovering from historic lows, 40 percent of the country’s 137 million homes are at least 50 years old. “The aging of the housing stock has been a boon to the remodeling industry, with spending surpassing investment in homebuilding every year for over a decade, and contributing 2.2 percent to U.S economic activity in 2017,” it said.
Abbe Will, Research Associate with the Joint Center, agreed that younger households are embracing remodeling. “While they have struggled to gain a foothold in the homeownership market since the housing crash, the number of owners under 35 is finally showing signs of a rebound, and so is their remodeling spending,” she said. “In particular, younger households contribute significantly more to local improvement spending in many metros across the Midwest and the South, where owning is more affordable than in high-cost metros on the east and west coasts.”
Will warned over the next decade, the strong preference of older homeowners to age in place and the increasing difficulty of building affordable housing in many markets will continue to hinder the construction of new homes. “The remodeling industry will therefore retain its critical role in helping the country meet its housing needs,” she said. “A likely upturn in homeownership among younger households will also support growth in remodeling spending as many of these new owners modify older homes to meet their needs and preferences. In addition, the rising incidence and severity of natural disasters have created a growing market for repair and renovation of housing damaged in these events.”
