Harvard researchers credit the improving housing market
Good news in the real estate market usually means good news on the home renovation front.
A recent report by a Harvard University think-tank says consumers will be spending more on home renovation projects as the year progresses. Existing home sales were nearly nine percent last year, with house prices continually inching upward this year.
Increased equity, increased spending
“This has increased the home equity levels for most homeowners, encouraging them to reinvest in their homes,” said Eric S. Belsky, managing director of the Joint Center for Housing Studies at Harvard University.
The report, issued a few weeks ago, predicts that consumer spending on home remodeling projects will increase from $125 billion at the start of 2013 to nearly $150 billion by the end of the year. This is compared to a low of about $111 billion in 2011.
The Harvard think tank uses a combination of factors to calculate their prediction, based upon statistics provided by agencies such as the Census Bureau, National Association of Realtors and the Federal Reserve, among others.
Renovation spending a key economic indicator
The U.S. remodeling industry is picking up speed as the housing market has revived, according to a report issued earlier this year by the think tank. Several factors are at play:
- Properties that were foreclosed are being purchased, often by investors who fix them up, or by homeowners seeking to customize a home to their liking.
- Sustainable home improvements are increasingly becoming more popular
- Older homeowners need to retrofit their homes to fit different needs
The emerging echo boom generation means more good news could be on the horizon for those in the remodeling industry, as people in this generation begin buying homes.
Researchers keep tabs on home improvement spending as an economic indicator because the amount of spending is so significant. Indeed, the home renovation researchers at Harvard said that spending on home renovation projects in 2011 surpassed money spent on clothing, furniture and home furnishings, and electronics/appliances.