All signs pointing up for home remodelers
Thursday, February 26, 2015
Studies conducted by various industry bodies point to a positive future ahead for the housing market at large, and more specifically the remodeling market.
According to Hanley Wood's Metro study unit, the Residential Remodeling Index (RRI), there will be an average growth of about 4 percent in the remodeling business. The prediction encompasses all metropolitan areas in the United States, with indications that the third quarter will see tremendous results.
The Residential Remodeling Index, which is a formula based on multiple economic indicators that influence remodeling, was at 97.2 by the end of 2014. The latest RRI is already 3.1 percent better than the index at this time last year.
The National Association of Home Builders (NAHB) has also posted optimistic results for 2015. Their study, which is based on a special formula called the Remodeling Market Index (RMI), has shown that 2014 ended with a record-high 60, a figure that denotes remodelers' confidence in quarter-over-quarter improvement in the market.
The pace and volume of business that geared up in 2014 seems to be going great and all set for higher returns and revenues this year. Recovery of the remodeling market is reflected in more homeowners ready and willing to remodel, with more bids, proposals and jobs in hand. This development spans large-scale additions and all kinds of renovations to smaller projects like maintenance and repair as well.
These developments are a result of the improving housing market, as experts predict that sales this year will top the 1999-2002 average. Homeowners who want top dollar for their listings are setting up higher budgets to improve the state of the property and making more successful staging through some serious remodeling work.
The rental market is also strengthening gradually, adding to the increasing demands for remodeling. Estimated costs for home improvement projects and how much owners can expect to recoup when they sell have been under scrutiny in the reports mentioned above. While lower-cost and smaller projects may return greater value (nearly 100 percent), large-scale jobs will also justify the returns.
Any kind of improvement will improve the market position of the property in relation to the competition, especially when remodelers today are deeply focused on aesthetic improvements and a winning first impression.
The kitchen still rules as the top remodeling request and actually offers more ROI in the long run. Remodelers today can turn your kitchen into a dream space for just a few thousand dollars, and in the process help create the wow impact for your home easily. It's that wow from the buyer that will get you the asking price or a figure quite close to it.
Other jobs that follow closely behind kitchen renovation include the replacing the front door, garage door, stone veneer or siding. The icing on the cake is that these small improvements help homeowners enjoy their renovated space even while they are waiting to put the house on the market and get a good price.
While these reports give a generic idea of what the market will look like in 2015, there are some regional figures that we need to take into account. The Pacific region — Alaska, California, Hawaii, Oregon and Washington — will see higher paybacks from their remodeling than the rest of the country.
Then there are the local demographics that one has to take into account like the neighborhood, economy and job market. As per the U.S. Census Bureau, the millennial generation (ages 18-34) will outweigh the number of baby boomers (ages 51-69) in the population in 2015.
Millennials are starting families, looking for larger homes and moving from one place to other with changing jobs. They also keep looking for additions and improvements to their living spaces. A flurry of activity to be sure, and this will add to the 3.5-4 perecnt average annual growth rate for the home improvement industry predicted by experts.
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