Florida Home Improvement Loan Activity Strong Amid Slowing Market

Remodeling activity remained steady in the fourth fiscal quarter of 2006, according to the National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI).

What this means in local terms is that Florida home improvement loan activity is not sagging off as much as traditional home purchase loan demand.

The current index edged up slightly from 47.8 to 48.2 on a seasonally adjusted basis and future expectations moved up to 46.0 from 45.4. The RMI measures remodeler perceptions of market demand for current and future residential home remodeling projects.

“Remodeling retained strength across most of the country compared to late last year,” said NAHB Remodelers Chairman Mike Nagel.

“Certainly regional economies and housing markets play an important role, but overall we see maintenance of high levels of remodeling activity and solid future prospects.”

The RMI component for the rental market indicated a stronger than expected increase in activity for that sector in the fourth quarter of 2006.

The current conditions index for renter-occupied markets increased from 38.8 to 44.1, while current conditions in owner-occupied units decreased from 51.4 to 49.7 in terms of remodeling demand.

At a time when Florida mortgage rates have remained steady, future expectations for the renter-occupied units also grew from 37.1 to 42.4, and owner-occupied units edged up from 45.0 to 45.6.

“Though the substantial reductions in home sales and new housing production have impacted the remodeling market to some degree, we feel that remodeling of both owner-occupied and rental housing will remain strong compared to other areas of the industry,” said NAHB Chief Economist Dave Seiders.

“With record levels of owners’ home equity and a constant need to upgrade the older housing stock, the remodeling outlook appears quite good for years to come.”

Regionally, the Southeast reported the most growth as current conditions increased to 52.8 and future expectations moved up to 51.1. While the slumping of the Florida housing market has been widely reported, this indicates record amounts of equity waiting to be tapped.

The current conditions in the West grew to 52.4, but future expectations fell to 51.3. In the Northeast, current conditions moved down to 45.7 while future expectations increased to 50.1. Only the Midwest showed declines in both, with current conditions decreasing to 44.4 and future expectations lowering to 35.7.

The RMI is based on a quarterly survey of home remodeling professionals, whose answers to a series of questions were assigned numerical values to calculate two separate indexes.

The first index gauges market conditions based on remodelers’ reports of major and minor additions and alterations, plus maintenance work and repairs, on both owner- and renter-occupied dwellings.

The second index gauges expectations for the near future and is based on remodelers’ reports of their calls for bids, amount of work committed for the next three months, job backlogs and appointments for proposals. This can be considered a gauge of future Florida home equity loan activity.