HOUSTON – (By Dale King, Realty News Report) – The home remodeling market in the U.S. has skyrocketed by more than 50% since the Great Recession of 2007-2009 ended, says a report by Harvard University’s Joint Center for Housing Studies.
Houston and its environs have generally mirrored that ballooning pace, said the owners of two local rehab firms. One service provider, Dan Bawden, owner and president of Legal Eagle Contractors in Bellaire, said he is currently dealing with a number of whole-house remodeling projects with six-figure price tags.
“About 10% of the calls we used to get were for whole-house projects,” he said. “Now, it’s 75 to 80%. When the phone rings with a call for remodeling, there’s an 80 to 90% chance it’s going to be something big.”
Ditto for Leslie King, owner and founder of Greymark Construction in Houston. “Housing prices in Houston have always been affordable. But in the last four years, they have taken off, and because of that, our business has taken off. The value of homes today justifies spending $75,000 to $100,000 on a renovation. It wasn’t like this before.”
The report from the Harvard Center’s Remodeling Futures Program finds that as home construction has struggled to meet the nation’s growing housing needs, spending on improvements and repairs to both owner-occupied and rental properties hit a record level of nearly $426 billion in 2017.
Throughout the U.S., nearly seven million rental and vacant units were converted to owner-occupancy dwellings in 2016 and 2017, and their owners invested $50 billion to improve their condition, the Harvard study says.
New residential construction is slowing recovering, said Abbe Will, associate project director in the Remodeling Futures Program, but the stock of existing homes is also getting old. “The aging of the housing stock has been a boon to the remodeling industry,” said Will, “with spending surpassing investment in homebuilding every year for a decade and contributing 2.2% to U.S. economic activity in 2017.”
The Harvard study adds: “The steady uptick in house prices in many markets and the aging population are also driving increased spending on home improvements and repairs.” People remaining in their homes longer also means they accumulate more equity, and can dip into that financial pool “to afford major renovations, including accessibility modifications that allow them to remain safely in their homes as they age. Households age 55 and over account for half of all improvement spending by homeowners today.”
The Harvard report is packed with figures, graphs and statistics, many of which can be bullet-pointed:
“Some of the recent strength in the remodeling market reflects a significant increase in spending by rental property owners. The surge in rental demand following the housing crisis prompted owners to invest in substantial upgrades to their units.”
“Over the next decade, the strong preference of older homeowners to age in place and the increasing difficulty of building affordable housing will keep the damper on new home construction.”
The national mobility rate – the share of the population that changes residences each year – has fallen by almost half over the past four decades.
“In areas where homeownership is relatively affordable, younger households do contribute significantly more to local improvement spending.”
“Nonetheless, the number of owners under age 35 is finally showing signs of a rebound – and so is their remodeling spending.”