Remodeling Posts Biggest Gain in a Decade
Americans spent $198.6 billion on remodeling projects last year, according to the U.S. Census Bureau. This was a 12.3% increase — the largest in more than a decade — from the $176.9 billion Americans spent in 2003.
“A combination of increased home sales, more owner equity and low refinance rates all contributed to the tremendous growth last year,” said Remodelors™ Council Chairman Don Novak, CGR, CAPS, a remodeler from Cedar Rapids, Iowa.
In addition, the NAHB Remodelors™ Council forecasts continued growth throughout 2005 to $209 billion — but at a less torrid increase of 6.3%.
Owner-occupied properties saw a major increase in remodeling spending to $143.4 billion in 2004 from $119.9 billion in 2003. At the same time, spending on renter-occupied properties decreased slightly last year from $57 billion to $55.1 billion.
“Because of rising home prices, home owners are more willing than ever to invest in their homes,” said NAHB Chief Economist Dave Seiders. “We see this as a continuing trend for several years to come.”
Rising home prices have encouraged remodeling in several ways, including:
- Remodeling has become easier to finance with the increased equity that home owners can tap into, either through refinancing or home equity loans.
- Home owners may decide to remain and improve their homes when faced with sticker shock from home prices, which nationwide appreciated by 15.1% last year.
- Rising prices make improvements look like better investments, with a higher percentage of the cost likely to be recouped in the home's sale. In markets with rapidly rising prices, it is not unreasonable for the home owner to expect to eventually recoup the full cost or more of an improvement project.
The aging housing stock — with homes an average 32 years old and rising — also contributes significantly to remodeling demand, creating ongoing opportunities for maintenance, repairs and improvements.
The NAHB University of Housing Offers Courses and Designation Programs
The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, visit www.nahb.org/designations.