The Joint Center for Housing Studies at Harvard University says after a double-digit decline since its peak in 2007 the U.S. remodeling industry is “poised for growth.”
JCHS said remodeling expenditures could increase at an inflation-adjusted 3.5% average annual rate, which is lower than the pace seen during the housing boom, “but sharply recovering from the recent downturn.”
And as the industry starts to “return to a more typical pattern of growth,” its main characteristics will also change.
If in the past remodeling was driven by higher end markets, going forward demand from lower-end markets also will generate considerable volume.
In the next five years, “the focus of remodeling spending will shift from upper-end discretionary projects to replacements and systems upgrades.”
A New Decade of Growth for Remodeling, the sixth and latest report in the center’s Improving America’s Housing series, finds that the severe downturn of the past years that caused the market fundamentals to hit bottom is bound to return to normalcy.
Contributing factors include the number of homes in the housing stock, the age of those homes, and the potential income gains for homeowners who opt to make home improvements. These “all point to increases in remodeling spending,” as both the economy and the housing market stabilize.
As to what markets may lead this return to remodeling expenditures, analysts said that “at least temporarily,” more remodeling spending will remain in older, slower-growing areas in the Rustbelt and in California.
