Last week, the Harvard Joint Center for Housing Studies reported that, hot on the heels of a downturn, the home improvement market appears to be trending upward, and may finally be poised for a nice rebound in 2012.
The Center estimated that home improvement spending increased by 9 percent last year, following a consistent downward spiral in previous years. Home improvement and repair spending topped out at $275 billion in 2011, a 4 percent drop from 2009 and an approximately 16 percent decline from 2007, according to the report.
The report showed that a surge in short sales and foreclosures, along with the relatively high share of underwater homeowners left many borrowers with very little encouragement to maintain or improve their real estate property conditions.
Market Turning ‘Green’
According to the report, the still-increasing interest in environmental sustainability appears to be kickstarting a rebound in the home improvement industry. It also outlined the fact that the amount of “inadequate” homes has risen 7 percent from 2007 to 2011, up to 2.4 million units. The study defined an inadequate home as one that lacks bathroom facilities or a complete kitchen or running water, and also exhibits other signs of dilapidation.
“As the broader economy recovers and housing markets tighten, however, some of these inadequate homes will likely be renovated to provide affordable housing opportunities,” the report stated.
In 2011, institutional sellers made improvements to about a third of their foreclosed real estate properties before sale and spent about $6,500 per unit, leading to a market expenditure of about $1.7 billion. Overall, home improvement expenditures for distressed properties reached approximately $9.8 billion in 2011.
Aside from improvements to distressed homes, the movement toward “green” improvements, such as increasing energy efficiency, is contributing positively to home improvement spending. The report also noted growth in the population of those 65 and over has potential to lead to a strong demand to retrofit existing homes in the 2020s and beyond.
This is filed under Home Selling.