As the housing market feels the continued strain of low supply, an increasing share of households and would-be buyers are solving their housing woes by remodeling.
A recent report by the Harvard University Joint Center for Housing Studies (JCHS) finds that the rate of home remodeling activity is rising at a strong and steady pace, with expected growth expected to remain above 6 percent year-over-year through the second quarter of 2018.
What is distinguishing this boom from typical home remodeling activity is the overall shortage of housing in the country combined with the strong recovery of housing prices in many areas, leading many to explore home renovations rather than venture into the market.
Quarterly gains in home improvement spending according to the Leading Indicator of Remodeling Activity
“The remodeling market continues to benefit from a stronger housing market and, in particular, solid gains in house prices, which are encouraging owners to make larger investments in their homes,” explains Chris Herbert, Managing Director of JCHS. “Yet, weak gains in home sales activity due to tight inventories in many parts of the country is constraining opportunities for more robust remodeling growth given that significant investments often occur around the time of a sale.”
As new home construction activity drops, the remodeling surge has been a boon for building contractors, and home improvement giants Lowes and Home Depot are reporting their highest gains since 2004 over the past fiscal year.
While growth in remodeling activity is expected to begin slowing in the latter half of next year, it remains to be seen what other band-aids homeowners will use to address the shortage of homes for sale — or how various metropolitan areas will respond to ease the shortage.
This article originally published at https://dc.urbanturf.com/articles/blog/amid_housing_inventory_shortage_homeowners_fuel_remodeling_boom/12837.
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