News, Trends, Community - February

Harvard Report

Remodeling Poised for Growth

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.

Headquarters

Pennsylvania Remodeler Makes Historic Move

Power Home Remodeling Group, formerly Brookhaven, Pa.-based Power Windows and Siding, has relocated its national headquarters to the Wharf at Rivertown in Chester, Pa., an architecturally and historically significant mixed-use office and retail project on the Delaware River that features the renovation of the former Delaware County Power Plant. More than 400 employees now are based at the new 58,000-square-foot headquarters. The state of Pennsylvania in 2010 awarded Power Home Remodeling Group a $200,000 Opportunity Grant that enabled the company to hire additional employees and supported the move to the new headquarters, which is located in a Keystone Opportunity Zone. Power Windows and Siding was listed as No. 4 on Qualified Remodeler’s 2010 Annual Top 500 listing.

Consumer Sentiment

Confidence in Housing Market Grows

Homeowners are steadily gaining more confidence in the housing market and real-estate prices compared to previous waves of data, according to the Chicago Booth/Kellogg School Financial Trust Index, a quarterly look at Americans’ trust in the nation’s financial system by Evanston, Ill.-based Northwestern University’s Kellogg School of Management and University of Chicago Booth School of Business. According to the index, 54 percent of people surveyed this quarter forecast that prices will remain stable, a sharp increase compared to 46 percent in September 2010. Similarly, fewer respondents (22 percent) now believe that home values will decrease during the next 12 months (as compared to 31 percent three months ago).

Pending Home Sales

Gradual Recovery Predicted

An upward trend in pending home sales in the second half of 2010 may indicate a gradual recovery into 2011, according to the Washington, D.C.-based National Association of Realtors.

The Pending Home Sales Index, a forward-looking indicator, rose 3.5 percent to 92.2 based on contracts signed in November 2010 from a downwardly revised 89.1 in October. The index is 5 percent below a reading of 97 in November 2009.

Lawrence Yun, NAR chief economist, said historically high housing affordability is boosting sales activity. “In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” he said. “But further gains are needed to reach normal levels of sales activity.”

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