Attention lenders! Are you looking for new markets for your money?

Try remodeling.

According to Kermit Baker of the Joint Center for Housing at Harvard University, financing for home improvement has been largely avoided by the industry “because the industry doesn’t know how to reach it.”

The net result, Baker said, is that only 25 percent of spending on home improvements is financed — and that percentage is either secured by home-equity loans or through refinancing the existing mortgage.

“Seniors especially are fearful of borrowing against their houses to make improvements,” Baker said. Many senior citizens own their homes free and clear and don’t want to trade away this freedom for debt, even if home repairs are necessary.

In studying the impact of home improvement activity, the Joint Center staff found that households with access to a home-improvement line of credit spend twice as much as those who don’t, he said.

“Taking differences in income and wealth into consideration, 20 to 25 percent of households spend more if financing is available,” Baker said. “The home-improvement industry — already worth $180 billion a year — could grow overnight if such financing was readily available.”

Remodeling by minority households is already an important piece of this equation and is destined to become more so, Baker said. Minority households already represent 25 percent of the U.S. population and will account for two-thirds of the growth in homeownership over this decade.

While Fannie Mae says that 50 percent of the home purchases it will finance in the next decade will be for minority buyers, “we don’t know yet how they will determine their spending priorities,” Baker said.

Research has shown that the peak years for remodeling start in the mid-30s and run through the mid-40s, he said. “All of the growth in remodeling is going to be in minority households that fall into that age segment.”

“Spending on remodeling is 20 percent less among minorities than non-minorities, and a higher share of the work is done by professionals than by do-it-yourselfers,” Baker said. “We expect that the use of professionals by minorities will match non-minorities in the next decade.”

Another growth area in remodeling will be for baby boomers who want to age in place --people 55 years and older those who wish to remain living independently in their present homes. This segment will help spending on remodeling grow 5 percent a year, according to Gopal Ahluwahlia, vice president of research for the National Association of Home Builders.

Many remodelers around the country are involved in this market, and, in an effort to bring some coherence to a relatively disorganized industry, the Remodelors Council of the NAHB is making available training and a designation – CAP or Certified Aging in Place -- for members to better deal with the 55 and older customer.

“We are teaching remodelers to assess needs of these people,” said Dan Bawden, a remodeler from Houston.

The AARP, which represents millions of people 50 and older, maintains that many of their members want to stay in their houses and are looking for reliable contractors to undertake the necessary modifications.

“But they are afraid of being ripped off,” Bawden said. “And even if they do find an honest guy, he might not necessarily know what he’s doing.”

The goal of the three-day course that the Remodelors Council will roll out May 2 at a Seniors Housing Symposium in Orlando, Fla., is to develop contractors who can handle such work and to ease the minds of these consumers at the same time.

In general, the remodeling industry took a hit in the second half of 2001 as the events of Sept. 11 aggravated problems associated with the economic slowdown already under way. Measures of remodeler confidence in the short-term outlook for the business fell by almost half from the first half of the year. That outlook was affected by the continued low inventory of houses for sale that typically provide the market for remodelers, a five-year peak in the unemployment rate and a decline in consumer confidence.

However, this downturn in business was accompanied by a shift that saw maintenance and repair jobs decline by 20 percent while additions and full scale remodeling projects increase by an equal percentage.

Many economists believe that the recession is about over, that the housing market has been relatively immune from the economic downturn, and that the demand for remodeling will be above normal very soon.