The time is right for home renovations
Wednesday, July 06, 2016
Homeowners are pulling out the stops on home renovation.
Increased confidence in the economy, rising home prices, a shortage of affordable housing, and a desire to stay put are combining to create near-record levels of renovation and remodeling activity. For new home buyers and those who plan to remain in their current home, kitchen and bathroom renovation projects top the list.
Conditions have rarely been better than now for remodelers and kitchen and bath specialists and designers. Not only are more homeowners undertaking renovation projects, but more are willing to spend more for bigger and higher quality projects.
In releasing the most recent Leading Indicator of Remodeling Activity (LIRA) projections, Chris Herbert, managing director of the Joint Center for Housing Studies, stated, "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."
Also driving the trend is the decision of many homeowners to upgrade their current home rather than buy up to a more "perfect" home. Results of the recently released Houzz survey, "Overview of U.S. Renovation in 2015," finds nearly half (49 percent) of homeowners undertaking renovations are reluctant to move, and nearly a third (31 percent) want to remain in their current neighborhood or area.
Speaking with Nancy Marshall-Genzer of Marketplace, Anthony Sanders, distinguished professor of finance at George Mason University, observed that following the housing crisis homeowners have soured on the idea of buying a big fancy house and decided they may as well enjoy the house they've got.
Surveys in the past few years revealed pent-up demand for home renovation and remodeling. Activity has been on the rise, but the pace accelerated notably last year.
Respondents to the Houzz survey reported a 12 percent rise in spending on both kitchen and bathroom renovations, including a 6 percent increase due to expansion of scope. One reason for the jump is that over the past year, homeowners have been spending more on the things they want, not just on repairs they need to do.
Abbe Will, a research analyst in the Remodeling Futures Program at the Joint Center, told financial news site BankRate, discretionary remodeling helped drive spending up 5.3 percent in the fourth quarter of 2015, higher than the historical trend. Overall, demand for larger remodeling projects is up so far in 2016, reports the National Association of Home Builders, with bathroom and kitchen remodels leading the way.
The Joint Center projects remodeling spending overall will increase 8.6 percent this year and accelerate to 9.7 percent in the first quarter of 2017. A BankRate Money Pulse survey conducted this past March found 28 percent of homeowners planned to undertake a remodeling project this year. Of those, 30 percent are planning a kitchen renovation and 30 percent a bathroom renovation.
More than half (52 percent) of the respondents to the Houzz survey — who clearly have an affinity for remodeling and design — plan to do so. Since Houzz reports that more than 4 out of 5 of them plan to hire a professional to help with their project, kitchen and bath specialists and designers can expect to stay busy throughout the second half of the year.
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