The Joint Center for Housing Studies at Harvard University just released the Improving America’s Housing 2019 report, and there’s great news in it for remodeling companies.
Here’s a look at the key points that will affect your business this year.
1. New Construction Down, Remodeling Up
New home building continues to be slow, and 40% of the housing stock in the US is at least 50 years old. More than 55% of residential investment takes place in remodeling.
Not surprisingly, in metropolitan areas with tight real estate markets — including Boston, San Francisco, and Seattle — homeowners are spending more on home improvements than those in slower sales areas.
While this is great news, it may also cause more new home builders to branch into remodeling as a revenue stream, meaning more competition.
2. The Customer Base
Older customers continue to drive most remodeling projects. Half of all home improvement spending was done by homeowners aged 55 and above.
However, spending by homeowners 35 years old and younger rose about 16%, and spending among this age group grew even faster, up 20%.
3. Rentals Flipping
Rental or vacant units are converting to owner-occupied spaces at a higher rate across the nation, and home improvement spending for these homes accounted for nine percent of the total.
Not surprisingly, the highest spending on converted units was in metros where the real estate market has a low supply of available housing.
4. Replacement Projects
As the housing stock ages, nearly half of the market’s improvement spending is on replacement projects — exterior and interior replacements, systems and equipment upgrades — up from 40% percent of total expenditures before the housing crash.
5. Financing Choices
Cash is still king — 77% of home improvement projects were paid out of savings. However, as project scope increases, owners are more likely to use their home equity or other forms of financing to cover the costs.
To dive deeper into the numbers and trends, you can download the full report from the JCHS website.