Every two years, The Joint Center for Housing Studies of Harvard University publishes a report supported by the companies and organizations who participate on two of their committees; the Policy Advisory Board and the Remodeling Futures Steering Committee.
The most recent report, A New Decade of Growth for Remodeling provides some insights that can help building professionals as they continue to struggle with a sluggish housing market.
If you follow the industry to great lengths, as I do, these reports provide a great deal of factual information from an historical perspective but only a small amount of forecast data.
For example, it is a given that older metropolitan areas have older stock that need energy efficiency upgrades while growth areas in the South and West have newer inventory. The number of remodeling opportunities, therefore, will be more abundant in older parts of the country.
When reading this report the questions one should ask are: What’s new? What’s different? What do I need to know?
Here are a few highlights:
- Green projects will continue to provide important growth opportunities. The results of the National Green Remodeling survey indicate that important projects where homeowners specified green features increased by 25% over all projects. Tax incentives due to energy efficiency, under the Federal Stimulus, helped support that increase.
- The share of replacement product systems upgrades that support energy efficiency will continue to grow.
- Energy efficiency upgrades for new and existing homes offers a huge potential for remodelers.
- With the economic downturn, immigration has slowed but as the economy recovers, new immigrants will contribute greatly to the remodeling industry over the next decade.
- Homeowners will continue to invest in small upgrades that provide a quicker payback or have incentives attached to them. With the reduction in the 2011 Economic Stimulus to $500 the projects could remain very small in scope.
From 2000-2005 there was a 7.3 percent growth rate for homeowner improvement spending, followed by a five year trend showing a -1.4 percent in spending. The report anticipates a 3.5 percent annual growth rate in home improvement spending which puts the 2010-2015 period in the middle of the two previous five year periods.
Also, in the next five years the number of households moving into 55 – 64 and 65+ age ranges will be preparing for retirement. If they plan to age in place they will, most likely, need to make renovations to their home to improve the energy efficiency and lower the maintenance needs of the structure such as increased insulation or low maintenance exterior cladding. This will be another opportunity for remodelers.
From 2002 – 2007 there was a 23% increase in specialty contractors and self-employed remodelers but since then, remodelers have struggled due to declines in homeowner spending and the increased competition from builders-turned-remodelers.
What we don’t know, because the data isn’t collected annually, is how many have survived the economic downturn. Clearly those who diversified their services or moved into niche markets, such as energy efficiency upgrades, most likely, have survived.
Rosemary Hayn is Manager, Market Research and Planning for CertainTeed Corporation