Instead of selling, homeowners are remodeling
The home-improvement industry has fared much better than the broader housing market, according to a report Thursday from the Joint Center for Housing Studies at Harvard University.
In fact, industry experts are predicting that 2015 could see record spending on home improvements.
After years of declining revenue, the industry is reinventing itself, said Kermit Baker, director of the joint center’s Remodeling Futures Program. “[The industry] is finding new ways to address emerging growth markets and rebuild its workforce for an evolving customer base,” he said.
The housing downturn contributed to strengthening the remodeling market, since many homeowners who would have moved to larger houses stayed put and improved instead.
Federal stimulus programs encouraged energy-efficient upgrades, and investors reinvested in rentals to attract tenants.
Spending on discretionary home improvement rose $6 billion between 2011 and 2013, the first increase since the downturn began in 2007, Baker said.
Big spending is mostly on kitchens and bathrooms in this area, said Jay Cipriani, of Cipriani Builders in Woodbury.
“They are doing this work to stay,” he said of the homeowners, adding that “I have not had anyone in the last two years say that they wanted to fix up their house to sell it.”
Dave Cerami, of Hometech Renovations in Fort Washington, said much of what he recommends to clients is based on how long they plan to live in the home, how old the house is, the neighborhood, “personal aesthetic and any upfront budgets they happen to provide.”
He said he works with budgets of $13,000 for “a floor-to-ceiling standard hall bath remodel,” while the starting for a small-scale kitchen project is about $35,000.
They’re not selling.
“I don’t usually hear we just renovated our kitchen because we want to move,” said Sarah Murray, of Weichert Realtors in Chadds Ford.
If selling, they paint, make repairs and “neutralize the carpets,” she said.
When Karen Quaile, principal in Real Estate Redone L.L.C., in Mullica Hill, buys a house to rehab for resale, “the three musts are usually roof, kitchen and bathrooms.”
Harris Gross, of Engineers for Home Inspection in Cherry Hill, said the amount investors spend on remodeling depends on the property condition.
“They often buy a home in poor condition at a lower price and renovate to make it attractive for sale,” Gross said.
Millennials are key to remodeling, said Chris Herbert, the joint center’s managing director.
“It’s only a matter of time before this generation becomes more active in the housing market, supporting stronger growth in home improvement spending,” he said.
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