Remodeling expenditures are expected to increase during the next several years at an inflation-adjusted 3.5 percent average annual rate. This is below the pace during the housing boom but sharply recovering from the recent downturn, according to the Cambridge, Mass.-based Joint Center for Housing Studies at Harvard University.
The industry, which saw a double-digit decline since its peak in 2007, is beginning to return to a more typical pattern of growth, the report says. In the next five years, the focus of remodeling spending will shift from upper-end discretionary projects to replacements and systems upgrades, the report continues. Remodeling contractors have a number of growth opportunities generated by underinvestment in distressed properties, lower mobility, changing migration patterns and the rise of environmental awareness.
“Lower household mobility following the housing-market crash means that in the coming years homeowners will increasingly focus on improvements with longer paybacks, particularly energy-efficient retrofits,” says Kermit Baker, director of the Remodeling Futures Program at JCHS.
“A New Decade of Growth for Remodeling” is the sixth and latest report in the Improving America’s Housing series, published by the Remodeling Futures Program at JCHS. To see the complete report, go to JCHS.harvard.edu/publications/remodeling/remodeling2011/index.htm.