The remodeling industry is still recovering from the housing downturn, economic recession and significant home equity loss, according to the Remodeling Industry Update released by Harvard University’s Joint Center for Housing Studies (JCHS).
Recovery will be gradual. The center’s most recent Leading Indicator of Remodeling Activity (LIRA) report points to the market nearing a cyclical low by early 2010 to be followed by a recovery in the first half. A quarterly LIRA update is due later this month.
Planned spending is recovering faster for upper-income homeowners, for less-leveraged seniors and for smaller cash projects.
Other findings were that stimulus program/green initiatives have had only modest impact on home improvement spending. For example, less than half of contractors, reporting on the basis of 2008 revenue, say they have worked on projects funded under the stimulus program. Of those who worked on such projects, building envelope energy tax credit projects dominated their stimulus-funded activities.
Activity Slows Following Gains
Existing-home sales in August gave back some of their strong gain in July but remain above year-ago levels, according to the National Association of Realtors.
Existing-home sales — including single-family, townhomes, condominiums and co-ops — declined 2.7 percent to a seasonally adjusted annual rate of 5.10 million units in August from a pace of 5.24 million in July, but remain 3.4 percent above the 4.93 million-unit level in August 2008. In the previous four months, sales had risen a total of 15.2 percent.
Lawrence Yun, NAR chief economist, said the tax credit is working. “The first-time buyer tax credit is having the intended impact of bringing buyers into the market, allowing them to take advantage of very favorable affordability conditions,” he said.
House Price Index
Small Increase Recorded
U.S. home prices rose 0.3 percent on a seasonally adjusted basis from June to July, according to the Federal Housing Finance Agency’s monthly House Price Index. The previously reported 0.5 percent increase in June was revised downward to a 0.1 percent increase. For the 12 months ending in July, U.S. prices fell 4.2 percent. The U.S. index is 10.5 percent below its April 2007 peak.
The FHFA monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. For the nine Census Divisions, seasonally adjusted monthly price changes from June to July ranged from -0.9 percent in the East South Central Division to + 1.6 percent in the Pacific Division.
Baby Boomers Want Convenience/Energy Efficiency
A recent survey reveals that 55+ Americans would prefer suburban living in single-story homes with amenities, particularly high-speed Internet access, for their later years, and they don’t consider “universal” design a priority. These are some of the findings from a survey conducted by the National Association of Home Builders (NAHB) and the MetLife Mature Market Institute, which asked owners and renters about their current homes and the types of homes, communities and features they prefer as they age.
The survey also questioned builders about specific features provided in new homes and how much customers are willing to pay for them, which revealed interesting contrasts. While builders seem to be providing more universal design features (lever-handle/door knobs, wider doors and hallways, a full bath at the entry level), consumer preferences don’t reflect an equal appreciation of such items. Consumers indicate they want amenities such as nonslip floors, larger medicine cabinets, lower kitchen cabinets and emergency call buttons, but those features are not as widely included in new homes.
On other issues, builders and consumers are closer to agreement. Consumers clearly want to be close to community resources like shopping and medical services; builders and developers have responded by placing communities accordingly.