HGTV’s ‘Fixer Upper’ Is Testament to Homeowners’ Budding Demands
(Bloomberg) -- Americans’ love for home improvement shows extends beyond their flat screens. Property owners are spending more on home improvement and maintenance than ever before.
The U.S. remodeling market reached a record $424 billion in 2017, according to a report by Harvard University’s research center. Rising home prices and an aging U.S. housing stock have helped lift the market to new highs, said Abbe Will, research associate at the Joint Center for Housing Studies at Harvard University.
"The growth in home prices is certainly a confidence booster," Will said. "Homeowners are willing and more confidently investing in major remodeling projects when they see their home values going up."
New construction has been slow to recover from the last downturn and forty percent of the nation’s homes are at least 50 years old. Also contributing to the growth in the remodeling market is the aging U.S. population. Homeowners age 55 and older make up more than half of total spending nationally, according to Will.
"Part of that is that there are more older owners today than there were a decade or two ago," she said. "But their average spending levels for home improvements have also increased quite a bit."
Since the end of the Great Recession, the U.S. home remodeling market has grown more than 50 percent. Within this market, the homeowner improvements sector -- which includes discretionary projects like kitchen remodels and as well as routine upgrades like roofing and HVAC replacements -- increased the most. However, homeowners have been shifting away from discretionary remodels and replacement projects have taken up a larger share of home improvement budgets, according to the report published Tuesday.
Post-disaster repairs are also growing as natural disasters become more frequent and more devastating, according to the report. Disaster repair spending as a share of national improvement expenditures has grown from about "4.5 percent between the mid-1990s and the mid-2000s to 6.2 percent over the last decade." The largest expenditures were seen in Chicago, Dallas, Houston, Minneapolis, and San Antonio.
Almost half of total spending nationally for homeowner improvements was spent on replacements -- that compares with 40 percent historically. Again, the growing share of older homeowners and the age of the housing stock has driven that shift.
Older Americans may have already remodeled the kitchen in their younger years and are now spending more on routine replacements. And as homes age, their exterior and interior parts require replacement.
The share of replacement projects is likely to remain high in the coming decade as the housing stock ages. Roughly 17 million homes, one in eight, were build before the second world war and 40 percent of homes are more than 50 years old.
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