The remodeling industry is headed for recovery in 2011 and for continued growth in the coming decade, according to two recent announcements out of Harvard’s Joint Center for Housing Studies (JCHS).
LEADING INDICATOR OF REMODELING ACTIVITY: The most recent LIRA, released Jan. 13, predicts a fast start to 2011, with annual growth in remodeling spending expected to reach 12.7% in the second quarter before moderating to 6.5% in the second half of the year (see graph). While this is nowhere near the growth rate in 2007, the peak year in the last decade, it is a welcome change to an industry stuck in the doldrums since the economic meltdown of 2008.
The most recent LIRA shows Q4 2009 as the low-point in remodeling expenditures (solid graph), and predicts that spending for remodeling in 2011 will start fast, then moderate, but will improve overall to a 6.5% growth rate (line graph).
IMPROVING AMERICA’S HOUSING REPORT: Long-term remodeling growth is also the forecast in “A New Decade of Growth for Remodeling,” the sixth report in the Improving America’s Housing series from JCHS. (Download a PDF of the complete report here.)
Released at the International Builders’ Show in Orlando, also on Jan. 13, the report notes a return to a “more typical pattern of growth” after double-digit percentage declines over the last three years.
The report predicts a 3.5% annual growth rate for the next five years, citing favorable factors such as the number and age of existing housing stock as well as income gains among households undertaking remodeling and the expectation that homeowners will spend on maintenance they deferred during the recession.
The report also predicts a significant change in remodeling spending behavior, noting a shift away from discretionary remodeling toward maintenance, repair, and replacement. Other types of projects expected to see increased activity are improvements related to energy efficiency and aging-in-place retrofits.
The most recent LIRA shows Q4 2009 as the low-point in remodeling expenditures (solid graph), and predicts that spending for remodeling in 2011 will start fast, then moderate, but will improve overall to a 6.5% growth rate (line graph).
Source: Harvard University Joint Center of Housing Studies