Residential remodeling is poised for a recovery
Thursday, February 18, 2010
starting after this year’s first quarter, according to economists speaking at last month’s International Builders’ Show in Las Vegas. While remodelers will still encounter some reluctance from their prospective customers who have been rattled by financial losses in the stock market and home equity, the experts said, the industry will derive some strength from the slowly improving housing market –though the weak job market continues to be a challenge. Noting that many home builders have sought refuge from the steep downturn in the new-homes market by diversifying their operations into remodeling, the economists observed that this particular segment of the construction industry has held up better than others. And even though remodeling suffered its own hit in the latest recession, it has moved ahead of the new-home market in dollar volume, a trend that could continue for some time yet. Renowned expert Kermit Baker of Harvard University’s Joint Center for Housing Studies said that spending on remodeling fell to an estimated $246 billion last year, down about 35% from its cyclical high of $326 billion – but still ahead of what was spent on new-home purchases in that period. Harvard’s quarterly Leading Indicator of Remodeling Activity, released on Jan. 21, provided an encouraging signal that home owners are in fact starting to plan more improvement projects as they look forward to a national economic recovery. In nominal dollars, the yearly rate of home owner improvements is projected by the indicator to total just under $104 billion during the current quarter, which is 12% lower than the same quarter last year. The indicator shows improvements rising to $110.9 billion by the third quarter, only 3.1% below the year-ago rate.