Friday, March 06 2009
The report below is interesting as it illustrates the struggles the house remodeling industry has gone through in the past few years. In some ways the remodeling industry has followed the same down turns as the housing industry. The remodeling industry has however a better chance to change the course of direction as many homes need to be up dated in order to compete with other homes on the market.
Remodeling's Future Looks Bright
Market recovery will spur new remodeling opportunities, boosting spending.
Source: CUSTOM HOME Magazine
Publication date: March 2, 2009
By Stephani L. Miller
The entire home improvement industry in the United States is suffering from the same downturn that has struck the housing industry, though to a less severe extent. Like the housing industry, the remodeling sector grew at an unsustainable rate over the past decade, driven by high-end discretionary projects. According to a recent study by Harvard University's Joint Center for Housing Studies, "The Remodeling Market in Transition," the remodeling industry is about to experience an evolutionary shift, driven by changing home improvement demands.
Due to free-falling prices, many homeowners now have little to no equity in their homes, cutting off one major source of financing for improvement projects. And the free fall is expected to continue through 2009, according to Moody's Economy.com. Affected homeowners are unlikely to take on significant remodeling projects until prices stabilize, and even those who have enough equity in their homes may not meet the more stringent lending standards in place, the report indicates. Also, owners in danger of foreclosing are not likely to make home improvements. Those homeowners who are able to finance improvements will focus on maintaining their homes' structural integrity and stepping up energy efficiency to save on operating costs.
Once the economic turnaround begins, new remodeling growth opportunities will replace those that were important in the past decade, according to the report. Rehabilitating neglected or damaged foreclosure properties will be one area of growth, and improvement spending in areas with high foreclosure rates may resume quickly when markets begin to recover. There also will be three key market segments that will help offset remaining drag from the weak housing market, the report says:
With nearly 130 million existing homes in the U.S., all of which will require some sort of ongoing maintenance and improvement, the remodeling industry has a solid future. It is inevitable that during this challenging economy some businesses will fail, but the remodeling sector as a whole will emerge from the current crisis stronger than ever, the report predicts.
For complete details of "The Remodeling Market in Transition," download the report.