After the economic downturn of the past few years, the U.S. home improvement industry is ready for growth, according to a recent study from Harvard University’s Joint Center for Housing Studies .
The report, “A New Decade of Growth for Remodeling,” which is put out every other year by the Center’s Remodeling Futures Program, predicts remodeling spending will increase at an inflation-adjusted 3.5 percent average annual rate, which is lower than during the housing boom but a definite improvement after the recent downturn.
These predictions are based on data from the most recent American Housing Survey, according to Abbe Will, Researcher for the Center. Based on results of that survey, Will says the Center expects healthy growth over the next year as spending levels start to return to normal.
“We saw the industry really change from a couple years ago at the peak of the market, when customers were focusing on major kitchen and bathroom remodeling projects and pushing spending to new heights,” Will says. “Instead, homeowners are now focusing on what they need to do as opposed to what they’d want to do if the economy or housing market was better.”
Instead of optional projects, homeowners are focusing on replacing more functional aspects of their home and other elements that might boost the home’s sales potential.
“Over the last few years, we’ve seen a shift from those types of discretionary projects to replacing things like a home’s heating and cooling system,” Will says. “If people are trying to sell a home, they are really focusing on curb appeal – things like windows, siding and doors — and cutting down on projects that aren’t immediately going to increase the value of the home.”
Unfortunately, lighting projects typically fall into the discretionary category, Will says, or come into play as part of bigger projects, like room additions or complete remodels, which consumers have shied away from due to the economy. However, lighting upgrades could be more appealing to homeowners who live in older homes that might need an updated electrical system, or who want to switch to more energy-efficient lighting to save money on energy.
“There’s been a lot of talk about green remodeling, and the tax credits during the downturn have increased or stabilized that category,” Will says. “Homeowners are more likely to focus on what saves them on energy bills.”
As far as other trends in remodeling, Will says that due to the housing crash, there are a great deal of foreclosed homes that are going to need a lot of work once they’re purchased again.
“Once those homes are through the foreclosure process, they’re really going to need some attention as far as projects, basic maintenance and repairs that were neglected during the foreclosure process, so these homes will need a good amount of investment from new owners,” Will says.
The full report is available for download on the Center’s website .