According to a recent report from the Joint Center for Housing Studies at Harvard University, it looks like the home improvement industry is due for some much needed remodeling of its own. Following years of steadily declining revenue, experts say there is a rapidly growing number of homeowners who would rather improve than move.
However, according to the report, the home improvement industry as a whole has fared far better the general housing market, so much so that industry experts predict record spending on home improvements in 2015.
The industry is in the midst of reinventing itself after years of falling revenue, said Kermit Baker, director of the joint center’s Remodeling Futures Program. The entire industry “is finding new ways to address emerging growth markets and rebuild its workforce for an evolving customer base,” he said.
The housing downturn following the recession created a stronger remodeling market, as many homeowners who may have once wanted to move into larger houses decided to stay put and improve their homes.
In addition, federal stimulus programs encouraged the installation of energy-efficient upgrades such as solar panels, and investors reinvested in rental properties to attract potential tenants.
Between 2011 and 2013, spending on discretionary home improvement jumped by $6 billion, the first increase since the recession began in 2007, Baker said.
Also, falling consumer debt has left consumers with more disposable income to take on remodeling projects. Robert Davis, senior executive vice president of the American Bankers Association, said a Federal Reserve index used to track the percentage of disposable income goes towards servicing debt has fallen to its lowest level since the 1980s.
“Consumers have been deleveraging,” Davis said. “That ratio peaked at about 13.5 percent [debt-to-disposable income] in the fourth quarter of 2007, and has been on decline ever since. It is at a very low level now at 9.9 percent.”
Pagenstecher Group Principal Architect, Michael Ullrich, AIA, thinks there has been a noticeable shift in homeowner mentality since the economic downturn of 2007-08. “Instead of using the shortcomings of their home as a reason to move, homeowners are now seeking out ideas and professionals that can improve the utility and performance of their home so they want to stay.”
Ullrich expects the remodeling industry will continue its resurgence in 2015, as savvy homeowners look to do more with less. “Bigger is not necessarily better anymore.”