With residential values rising and the number of houses to purchase at an all-time low, more homeowners are choosing to remodel.
After a solid gain in 2013, housing analysts say that U.S. expenditures for home remodeling and improvements could hit a record high this year. Americans spent about $310 billion on these projects last year.
That’s up from a recent low of $276 billion in 2011.
“We think there will be some solid growth going forward,” said Paul Emrath, a top researcher with the National Association of Home Builders.
As home values grew by double-digit percentages in 2013 in many U.S. markets, lenders became more willing to finance home improvements.
“One of the things that is driving that is a lot of home equity folks can borrow against,” said Kermit Baker, with the Joint Center for Housing Studies at Harvard University. “Homes that are underwater on their mortgage are very difficult to do a remodeling project.
“It is now easier to justify a home improvement project.”
As in previous cycles, Americans are spending most of their remodeling dollars on new kitchens and bathrooms.
But they are also shelling out dollars to install energy savings-related upgrades, including new doors and windows and more efficient heating and air-conditioning systems.
“Almost 30 percent of (remodelers’) revenue now is coming from projects where environmental sustainability is a stated objective,” Baker said.
Remodelers say that the number of homeowners who have decided to do a whole-house makeover is also rising.
“We attribute this to consumer confidence coming back,” said Houston remodeler Dan Bawden. “They are finally feeling they are not going to get the pink slip at work.
“It’s a very exciting thing to see as a small-business person.”
Bawden said aging homeowners are also paying for retrofits that will allow them to stay in the houses as they grow older.
“They are fixing their space up so they don’t have to make any changes later on,” he said.
Baby boomers who decide to stay in their current houses rather than downsize are likely to remodel.
“We think this is going to be a very strong market moving forward to renovate those homes,” Baker said.
Paul Sullivan, a remodeling contractor from New England, said that when the economy turned down starting in 2008, many of his clients canceled planned home improvements _ especially the larger projects.
“They evaporated literally overnight _ it was like they never existed,” Sullivan said. “For the past couple of years, they have not put any money in those homes.
“But they are feeling comfortable enough with the economy now to start in investing.”
With a tight inventory of homes for sale in many U.S. cities and higher prices for new houses, remodelers are hoping more homeowners will decide to stay put and upgrade.
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