Baby boomers may be sparking a remodeling boom. Homeowner spending on remodeling projects is expected to see steady growth through 2025, according to Demographic Change and the Remodeling Outlook
, released by Harvard Joint Center for Housing Studies
. Older owners are expected to make up the majority of those spending gains over the coming years too as they adapt their homes to be able to age in place.
Expenditures by homeowners over age 55 are expected to increase by nearly 33 percent by 2025, which will account for more than three-quarters of total gains over the next 10 years, according to the JCHS report.
“A disproportionate share of growth over the coming decade will be among older owners, minority owners, and households without young children, groups that traditionally spend less on home improvements,” the report notes.
The residential remodeling market, which includes spending on improvements and repairs by homeowners and rental property owners, zoomed to an all-time high of $340 billion in 2015. That surpassed the prior peak set in 2007.
Remodeling improvements are expected to increase 2 percent per year, on average, through 2025, after adjusting for inflation, according to the JCHS report.
“With national house prices rising sufficiently to help owners rebuild home equity lost during the downturn, and with both household incomes and existing home sales on the rise, we expect to see continued growth in the home improvement market,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies.
Rising home prices are encouraging homeowners to reinvest in their homes. But the increase in prices and mortgage rates are making it more difficult for younger households to make improvements and repairs, the report notes. Still, millennials are expected to take on more remodeling projects over the next decade, particularly as they buy up older, more affordable homes that are in need of renovations.
“Despite these challenges, the remodeling industry should see numerous growth opportunities over the next decade,” says Chris Herbert, managing director of the Joint Center for Housing Studies. “Strong demand for rental housing has opened up that segment to a new wave of capital investment, and the shortage of affordable housing in much of the country makes the stock of older homes an attractive option for buyers willing to invest in upgrades.”
The increase in remodeling will likely spur growth within specialty niches, such as those focused on energy efficiency, environmental sustainability, home automation, and healthy homes.
Source: “Improving America’s Housing 2017: Demographic Changes and the Remodeling Outlook,” Harvard University’s Joint Center for housing Studies (2017)