If your business involves home improvement, chances are business has been good. Harvard University's Joint Center for Housing Studies forecasts rising remodeling spending to reach $325 billion by early 2017 – the highest level in a decade.
While you’ve been focused on keeping up with your projects, industry experts have been keeping tabs on key reasons home renovation professionals like you have been so busy – and should continue to be in the new year.
Fewer New Home Builds
The recession hit new home construction hard. And the industry is still struggling to recover. According to the Reuters news agency, starts on single-family homes as of June 2016 were down 25% or more from annual home starts of the previous two decades.
Home Sweeter Home
With fewer opportunities to find a new home with the upgrades they want, some homeowners are opting instead to upgrade their current homes. Michael Kelczewski, a Delaware-area realtor with Brandywine Fine Properties Sotheby's International Realty, confirms, “My local market is rich with older homes that lack modern layouts. With new construction limited, many are removing walls or adding an addition.”
Fewer Professionals To Build (Or Renovate) Them
One reason the supply of new houses is lagging behind demand is also the reason some remodeling contractors are struggling to keep up with the demand for their services: a shortage of skilled construction professionals.
The National Association of Homebuilders (NAHB) reports that when the housing market went bust, an estimated 30 percent of construction workers went elsewhere, entering new fields and leaving the construction industry entirely.
That labor shortage is now being acutely felt. The NAHB estimates that there are 200,000 unfilled construction jobs in the U.S. – an increase of 81 percent in the last two years.
Fewer Existing Homes For Sale
Homeowners looking for an existing home are also finding fewer choices than in the past. USA Today reports that in June 2016 the U.S. housing market saw its 14th month of year-over-year decline in existing home inventory.
Lawrence Yun, chief economist for the National Association of Realtors, affirms, "Realtors are reporting diminished buyer traffic because of the scarce number of affordable homes on the market.” When homeowners decide not to move, their next thought may be to improve.
Bigger Price Tags For Existing Homes
While the squeeze in the existing home inventory might be bad news for shoppers, it’s welcome news for sellers. USA Today reports that in June 2016 the median sale price for existing home sales rose 5.3% - the 53rd straight month of year-over-year growth.
The promise of selling for a higher price attracts homeowners looking to cash in on their investment. As realtor Carolina Buia of Illustrated Properties in Palm Beach Gardens, Florida, adds, it also drives home renovations. “Anytime there is a strong current that pushes home sales upwards, we see more homeowners remodeling,” she says. “Not only because they are thinking of putting their homes on the market in the next three-to-six months, but because their neighbors are doing it and they don't want to be "that" house, stuck in the 90s.”
More Equity In Current Homes
Financing that long-awaited remodeling project has also become easier for many homeowners, thanks to increased home equity. Property information company CoreLogic reports that by the end of 2015, 91.5 percent of residential properties with mortgages had equity. And more homeowners are using it to improve their homes.
Greg McBride, Bankrate.com's chief financial analyst, agrees. "The current dynamic is that people are staying in their homes longer,” he says. "Rather than taking out a new mortgage on the bigger home they're looking to buy, people instead are staying put and taking out a HELOC to fund improvements or upgrades to their current home now that they expect to be there longer."
For these reasons and more, you can expect the demand for home remodeling, and for qualified home remodeling professionals, to continue into 2017. So we’ll look forward to seeing you at your local ProSource Wholesale Showroom, where our experts will be ready to help with the products and support your clients demand.
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