Harvard Housing Report On Unexpected High Home Improvement Demand

Minneapolis, Minnesota (PRWEB) January 24, 2013

The demand for home remodeling is on the increase. The U.S. Housing Stock: Ready for Renewal Report, released by Harvard University January 23, 2013, explains the expected changes in demand for home improvement projects and spendingover the coming decade. Sustainable home improvements are gaining in popularity as homeowners gain confidence that home values are increasing and they must improve and maintain their homes .

Prior to the strengthened housing recovery in 2012, the housing market “experienced years of underinvestment in the nation’s housing stock”, according to the report. Homeowners who have ridden out the market lows now face a greater need to tackle the home improvement projects accruing on their To-Do Lists.

Butch Sprenger, owner of Destiny Homes, commented: “During the housing market downturn, some luxury home owners held off on upper-end discretionary improvement projects, such as major kitchen remodels, room additions and bath remodels. With an increase in the number of homeowners now moving ahead, many Minneapolis home design and building contractors finished 2012 strong and anticipate an even better 2013”.

Following home improvement remodeling data and trends, the Joint Center for Housing Studies at Harvard estimates that spending on home improvements increased about 9 percent in 2012. “In 2011, improvement spending on distressed properties was estimated to be almost $10 billion. Housing starts also climbed almost 30 percent in 2012, while existing home sales surpassed the 4.0 million mark for the first time,” according to the report.

Destiny Homes finds the following key highlights in the home improvement report findings:

  • 82 percent of home improvement and repair spending went to owner-occupied homes, with the remaining slice to rental units.

  • Residential fixed investment, which includes home building and home improvement spending, fell from a 5.2 percent average share of gross domestic product (GDP) during the 20 years prior to the Great Recession to a mere 2.8 percent between 2008 and 2012.
  • Spending on discretionary home improvements, particularly upper-end remodeling projects by high-spending households — comprises the lions share of the remodeling industry more than the number of households undertaking projects.
  • Over 40 percent of remodeling expenditures were for replacements (such as roofing, siding, windows, and doors) and plumbing, electrical, and HVAC systems upgrades.
  • 12 percent went for interior upgrades to flooring, paneling, ceilings, and better insulated homes.
  • 22 percent was for other property improvements such as garages, driveways, fencing, patios, and disaster repairs.
  • Home prices in neighborhoods with higher levels of home improvement spending appreciate more rapidly.

The report highlights the growing supply of homes that have been through the protracted foreclosure process represents a major opportunity for home remodeling contractors. In 2011 alone, renovations of just over a million distressed properties generated about $10 billion in home improvement spending. With nearly 3 million additional homes currently in or at risk of foreclosure, many more billions must be spent to upgrade these properties for return to the housing market through home renovations and remodels to make them suitable once again to be owner-occupied.

“The Minneapolis improving housing market experienced a tremendous influx of home investors in 2012 who bought up Twin Cities foreclosed homes for the purpose of renovating them and investing in their home values for a later return”, says Sprenger.

According to the report, home improvement projects intended to increase environmental sustainability are likely to account for a growing share of dollars spent on home remodeling. Home builder efforts to build green homes are rewarded in the marketplace, by home buyers who are willing to paying premiums of nearly 10 percent for new homes that carry a green home certification.

Older homeowners are retrofitting their homes to accommodate their future needs and upgrades to maintain a home. “Due to colder winters Minneapolis home builders frequently see requests for better home insulation. As a Twin Cities luxury home builder, we have seen an increase in high-ended home remodels in existing homes, including historic Minneapolis homes.” notes Sprenger. Both homeowners of older homes and higher incomes yield greater homeowner spending on improvements. “Among metros with the highest improvement spending per household in 2011, 42% of homeowners earned above $100,000,” according to the Harvard report.

Destiny Homes brings new ideas, knowledge and expertise to Minneapolis home remodeling projects for a much better end result. Contact Destiny Homes at 952-934-5706 for a free consultation for your home remodel and home improvement projects in 2013.

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