Thanks to the continued housing market recovery, homeowners are expected to increase their home renovation projects, according to a report issued this week by Harvard University’s Joint Center for Housing Studies. JCHS Managing Director Chris Herbert weighs in on what this means for many markets across the country.
- A new report shows homeowners are expected to increase their home renovation projects this year.
- The question remains whether labor availability and consumer financing will be equipped to meet this increased demand.
- Agents would be keen to keep an eye on how this trend may affect the listings in their area.
Thanks to the continued housing market recovery, homeowners are expected to increase their home renovation projects this year, according to the latest Leading Indicator of Remodeling Activity (LIRA) report issued this week by Harvard University’s Joint Center for Housing Studies (JCHS).
The LIRA report is released once per quarter by the JCHS Remodeling Futures Program, which monitors the growth and changing characteristics of home renovation and repairs. This information sheds light on the relationship between the home improvement and residential construction industries.
According to the report, home improvement spending increased 5.3 percent to $141.7 million year-over-year in the fourth quarter of 2015. Last year, year-over-year spending increased by about 4 to 7 percent each quarter.
“In most markets across the country, rising house prices are bringing more homes to the market and increasing sales, which is a large driver of home improvement activity,” said JCHS Managing Director Chris Herbert.
Based on these results, annual spending for home improvements is expected to increase by 4.3 percent in the first quarter to 7.6 percent in the third quarter.
By then, the level of annual spending in nominal terms is anticipated to surpass the previous peak set in 2006 and hit about $154.8 million, the report predicted.
“The remodeling market has steadily improved in recent years with homeowners incorporating larger, more discretionary projects into their home improvement priorities,” said Abbe Will, a research analyst in the Remodeling Futures Program. “The real test this year will be whether the industry can clear ongoing bottlenecks in labor availability and consumer financing concerns to fully meet this increased demand.”