Home Remodeling Perking Up

Home Remodeling & Maintenance

Home Remodeling Perking Up

The home remodeling business is showing signs of a revival. By next spring, dollars spent on home additions and improvements should start to rise after falling steadily for about three years.

The steady climb in sales of existing homes is behind the improved outlook for remodelers. Owners looking to sell are sprucing up their houses, improving their curb appeal and upgrading interiors. At the same time, the increased number of buyers means more folks eager to make changes and put their own stamp on newly purchased existing homes once they move in.

It’s especially heartening that remodelers are seeing more big projects, such as additions and kitchen makeovers, with price tags totaling over $25,000. Other projects -- the replacement of windows, doors and roofs and upgrades of plumbing and electrical systems -- have remained more or less steady.

Sponsored Content

There’s been enough business during the recession to enable some small builders to stay alive, says David Crowe, chief economist with the National Association of Home Builders. The dollars they’re earning doing fix-ups is helping to offset the drying up of profits from new-home construction. The evaporation of that business has been made even tougher in this downturn by a rising tide of foreclosures and the unwillingness of banks to make any new construction loans.


Ironically, increased foreclosures next year are likely to generate increased remodeling business as buyers snatching up bargains repair and improve the acquired properties. The number of foreclosure sales is expected to rise to 1.9 million in 2010, following 1.7 million this year and about 500,000 in a typical year.

Although activity will increase, recovery will be slow. By the second quarter of next year, the four-quarter moving total of about $107 billion will still be about 9% below the year before, according to the Joint Center for Housing Studies at Harvard University. According to the center, money spent by homeowners to remodel has been slipping since the second quarter of 2007 and is now down about 28% from the prerecession level. Kermit Baker, director of the housing center’s Remodeling Futures Program, says the severity of this recession, which has eliminated more than 7 million jobs, means it will take awhile to regain the peak. “Job growth and income gains drive remodeling,” says Baker.

A quarterly survey of remodelers conducted by the home builders’ association confirms the sharp drop in activity and the expectation of recovery. Asked for an assessment of future activity based on appointments and backlogs, remodelers’ answers pushed an index of their sentiments from a low of 18.6 in the fourth quarter of 2008 to 34.2 in the second quarter of this year. The index hit a high of 57.8 in the first quarter of 2004.

For weekly updates on topics to improve your business decisionmaking, click here.