The home renovation and design market is expected to see decelerating year-over-year gains throughout most of 2015 and then pick up in the final quarter, a report released April 16 by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University has predicted.
The tepid real estate market for existing homes is partially to blame for this slowdown, according to Chris Hebert, the Joint Center’s managing director.
“Housing turnover typically sparks significant improvement spending, as new owners customize their recent purchases to fit their needs,” he said in a statement. “[W]ith sales down last year, remodeling will feel the effects this year.”
The Leading Indicator of Remodeling Activity, which is intended to estimate homeowner spending across the nation for the current and next three quarters, indicates that spending for the current quarter should total around $138.4 billion. That’s an increase of 4.4% over the same period last year.
Things will be a bit slower in the third quarter, with spending of $140.8 billion, or an increase of only 2.1% over that period last year. A modest recovery should occur in the fourth quarter with a 2.9% year-over-year increase bringing total spending to $147.4 billion.
But according to the Lowell Sun, Remodeling Futures Program research analyst Abbe Will thinks that growing home equity and strong sales of building materials will encourage continued investment in existing home properties.
Not all remodeling projects are equally good investments, however, as the U.S. News and World Report money section recently examined. Kitchens and bathrooms still sell houses, but homeowners will only see a 70% return, on average, even for bathroom remodeling. That figure is based on the Remodeling 2015 Cost vs. Value Report released earlier this year.
A report released toward the beginning of the year by the Joint Center for Housing Studies also found that some groups of homeowners are remodeling more than others. Baby Boomers, in particular, are doing renovations, and accessibility improvements that would allow seniors to age in place are expected to be a major area of opportunity in the home remodeling market in the coming years.
“We are living longer these days and want to live independently for as long as possible,” states Michael Ullrich, Principal Architect, Pagenstecher Group. “But the average two-story home is often ill-suited for us to age-in-place. We have worked with several clients to develop age-in-place strategies for their homes– addressing circulation and accessibility concerns and incorporating amenities like first floor sleeping quarters and bathing facilities. Though the trend is currently driven by the baby boomers, I believe that age-in-place concepts are becoming standard practice, applicable to the old and the young.”