The home improvement renaissance
Tony Kontzer | Improvement Center Columnist | November 4, 2013
With the nation's housing market apparently back on a sustained growth track, homeowners are spending more than ever on home improvement, and it appears they'll continue to do so well into 2014.
Whether it's to increase the value of their home or simply spruce up their living spaces, homeowners continue to take advantage of historically low interest rates to finance projects of all sizes. The Home Improvement Research Institute recently increased its already robust projections, estimating that spending on home improvement products will reach $293 billion in 2013, a 5.4 percent increase over 2012. Better yet, HIRI anticipates growth to average 6.9 percent annually in 2014 and 2015, with a correction back to 4 to 5 percent expected in subsequent years as the housing market cycles downward.
Even more significant is the growth in major improvement projects. The most recent Leading Indicator of Remodeling Activity (LIRA) from Harvard University's Join Center for Housing Study, which tracks projects such as kitchen and bath remodels, projected spending on such projects of $150.1 billion in 2013, up more than 20 percent from the $124.9 billion that was spent in 2012. The next update of LIRA is expected in January.
Much of the credit for the uptick in home improvement spending should go to the gradually improving economy. As conditions improve, homeowners are becoming less gun-shy about making investments in their homes. The 2013 Houzz & Home Survey found that the percentage of homeowners who say they're delaying projects due to the economy has dropped to 45 percent from 52 percent during 2012. Houzz, the home design marketplace that conducts the survey, says its 2013 research, which was based on responses from more than 100,000 members of its community, represents the largest survey of remodeling and decorating activity ever conducted.
Drilling down into the Houzz & Home findings, 83 percent of respondents said that improving the look and feel of their living space was the key driver for recently completed projects, while the percentage who said they remodeled to increase the value of their home grew to 54 percent from 47 percent in 2012.
As for what's on the horizon, it should come as no surprise that bathrooms and kitchens are getting the most attention, with 28 percent of Houzz & Home respondents planning a bathroom remodel or addition and 23 percent planning to rethink their kitchens.
And it's not just that more homeowners are remodeling; they're also spending more when they do. A just-completed research report jointly assembled by Planese, a home remodel planning app for iPhone, and RemodelOrMove.com, an online home improvement knowledge base, indicates that homeowners are up-scaling their remodeling projects.
The study found that homeowners are willing to spend 30 percent of the value of their homes on remodels, up from 28 percent in 2010 and 25 percent in 2007.
It also found that 43 percent of homeowners planning a remodel intended to do none of the work themselves, up from 36 percent in both 2010 and 2007. That's because they're more willing to pay experts, with 74 percent saying they plan to use a general contractor, up from 64 percent in 2010, and 56 percent planning to use an architect, up from 47 percent.
Even tastes are getting more extravagant, as 17 percent of homeowners said they planned to use expensive materials for their remodels, a 70 percent increase from three years ago.
All of these trends are good news for the housing market in general, as so many homes getting fresh looks will eventually lead to more move-in-ready homes being offered for sale.