By Mike Colpitts
Home remodeling is moving into a rebound as spring flowers begin to bloom. The National Association of Home Builders Remodeling index reached 46.5 in the first quarter, marking its highest level since 2006, and the Harvard University Joint Center for Housing Studies is predicting remodeling to rebound in 2011.
Retail sales at home remodeling stores have seen an increase, but most large hardware suppliers report erratic sales as homeowners hold on to their money tightly. However, many contractors who specialize in remodels and upgrading homes see an increase in appointments leading to future business.
“Remodelers report a jump in activity so far this year and have been receiving more calls for work and appointments,” said NAHB Remodelers Chairman Bob Peterson. “However, many home owners are still slow to commit to remodeling due to feeling uncertain about the economic recovery and difficulty obtaining loans.”
The builders’ association index shows growth in all but one U.S. region. The Midwest experienced a decline in service appointments during the quarter, but was probably due to unseasonably tough weather conditions. Declining home values in the majority of the country tends to keep homeowners in the same residence for a longer number of years as they wait-out the housing market downturn, triggering an increase in remodeling.
Pent up demand with the purchase of new appliances and kitchen cabinets provides an increase in sales for the home remodeling industry. Bathroom remodels are the most popular part of a home to undergo improvements, followed by kitchen upgrades, which can also include new flooring and counters.
The foreclosure crisis is also fueling an increase in remodeling. The average foreclosure takes about $5,000 in repairs and supplies to make a home livable, including carpet, paint and kitchen flooring as some of the most common upgrades.
Homeowners are also delaying moves to a smaller home as a result of the decline in home prices, hoping that values recover sooner rather than later so they will be able to recover at least part of the price many paid for their homes in the last decade. The trend is leading to an additional increase in home product and supply sales to upgrade current living conditions and provide future selling features to a new owner.