If you've set in motion remodeling jobs for your home, you've chosen an opportune time to spruce up your home, perhaps expand its square footage, pump up its value and, perhaps most importantly, move out ahead of the pack.
What was a sluggish 2006-year-end remodeling market is poised to rebound and that's likely to push up material costs and make finding good help a tad more difficult.
"The 2006 slowdown in the broader housing sector was reflected in the remodeling industry, with many home owners putting their improvement activity on hold until the market stabilizes" said Nicolas P. Retsinas, director of the Joint Center in comment accompanying "Foundations for Future Growth in the Remodeling Industry" the latest landmark remodeling industry forecast from Harvard University's Joint Center For Housing Studies.
Spending on home improvements is expected to increase at a sustainable 3.7 percent inflation-adjusted annual rate over the next decade, the report says and the current housing market's behavior and composition is the trigger.
The report says the current slow down in home sales means owners will stay in their homes longer and instead of moving up, fix up to add space, value and comfort.
The rising cost of energy and climatic change exacerbated by global warming will make energy efficient improvements a popular job.
Newer buyers will take the traditional approach and update kitchens and baths as well as add on rooms and hire out for structural changes.
More experienced home owners will likely pull more deferred maintenance and bring the condition of their homes up to contemporary standards.
Also the aging housing stock puts 66 percent of homes now at 25 or more years older, the age range where improvement spending zooms, according to the report.
The center also reported these key finds:
- Homes in disrepair will help boost the market. Some 31 million home owners averaged less than $1,000 a year on real improvement and maintenance from 2000-2005 -- often an amount not sufficient to even maintain the current condition of the home.
- Homes are older. Nearly 33 percent of owner-occupied homes are 45 years old or more. An additional third is between 25 and 45 years old. Many of them are in dire need of remodeling and repair.
- Home owners are awash in equity, nearly a trillion dollars outstanding. Owners of homes that have appreciated by 100 percent or more during the last decade spend 2.5 times more on improvements than those with home values that rose 50 percent or less.
- Home ownership is growing. Between 2005 and 2015, the number of home owners will increase by more than 12 million as average per household spending grows by 23 percent.
- More GenXers will be fixing up. By 2015, Generation X members will represent the largest share of home owner improvement spending, 27 percent. Younger baby boomers will make up 23.6 percent of improvement spending while older baby boomers empty-nesting, semi-retiring and reinventing life will contribute 21.3 percent of spending.
- More minorities are fixing up. The number of minority home owners will increase by more than 40 percent in the next decade, and will represent 25 percent of all home owner spending in 2015.
- Smaller projects will rule. The best deals, when it comes to replacement value will be mid-range versions of projects rather than upscale. Likewise replacement projects will provide a better return than discretionary improvements.
- Professional work will increase most. Spending in the professional segment will rise by 46 percent over the next decade, while do-it-yourself spending should increase by 37 percent.
