Remodeling Boom Grows Louder

When the National Association of Home Builders met in Orlando last month, the remodeling industry played a prominent role in the discussions. As home construction in certain areas - such as Southwest Florida - is outweighing the demand for new home loans, that market should expect to slow down in the near future.

Don’t expect this to be the case for remodeling efforts, however.

“Baby boomers aren’t done in terms of remodeling activity,” said William Apgar, a former federal housing official who is now senior scholar at Harvard’s Joint Center for Housing Studies.

The huge Baby Boom generation, members of which begin turning 60 this year, have been spending twice as much as the 50 to 70-year olds that have come before them, Apgar pointed out - and there’s no reason to indicate they are likely to stop.

According to the Joint Center, total remodeling activity reached $233 billion in 2005, representing about 40 percent of the giant construction market. However, growth in the sector should tail off from some 20 percent, as recently as 2003, to about 4 percent annually this year.

Kermit Baker, who directs the Center’s Remodeling Futures Program, said the remodeling portion of the market will be stronger than new construction. Home improvement spending by home owners grew by 4.5 percent last year, with owner-occupants investing $149.5 billion in their homes, Baker reported.

Although rising short-term interest rates and prices appreciate at a slower rate, owner spending, he said, the home improvement market “continues to be a major sector of our economy.”

Gopal Ahluwalia, staff vice president of research in NAHB’s economics group, is expecting spending on remodeling to grow by about 5 percent annually for the foreseeable future.

Despite the recent refi booms, he pointed out, owners still have $10 trillion in equity left in their homes, and they’ll spend lots of it on their houses in an attempt to keep up with the Joneses.

“As home prices rise, owners want to improve the value of their real estate,” Ahluwalia said. “They’ll want larger homes and better features as they try to keep up with the new houses that are being built bigger and better every year.”

This evidence all points to an increased value in one’s Florida home loan. Once a buyer has secured his new house, he’s more likely than ever to look toward improving it through remodeling efforts.