Are You Making Home Improvements? You're Not Alone
A new report shows the U.S. home improvement industry has fared much better than the broader housing market in the aftermath of the Great Recession. Home improvements and repairs — a $300 billion industry — are back on the rise and now generate about 1.8% of U.S. economic activity.
The home improvement industry could easily post record-level spending in 2015, according to the report (Joint Center for Housing Studies of Harvard University). Homebuilding, on the other hand, is many years away from a full recovery, the study says.
Owners spent an average of $2500 in home improvements in 2013, well below the peak of $3400 in 2007 — yet 8% above the average from 1995 to 2005 (adjusted for inflation).
Remodeling the Kitchen?
Spending on discretionary home improvements — kitchen and bath remodeling, room additions, building a porch or deck — rose by nearly $6 billion between 2011 and 2013. Significantly, the share of spending on these projects rose for the first time since before the housing crash. The increase reflects a strengthening economy and the recovery of house prices.
Who Spends the Most?
So which homeowners spend the most on home improvement? Baby boomers (in their 50s and 60s). As they move into their retirement years, they accounted for almost half of all spending in 2013.
Older owners are a big market. The share of home improvement spending by homeowners age 65 and over has gone up a lot, rising from 13% in 2005 to 23% in 2013.
While baby boomers are still the primary driver, Gen X-ers (roughly ages 35 to 55) are gaining share. As for millennials, with lower household formation and homeownership rates, they spent less than expected on home improvements.
Movers and Shakers
If you moved recently, in the past three years, you're also likely to have spent more fixing up your home. So, too, if you live in the Northeast, which leads the remodeling market recovery.
The largest remodeling markets? The New York metro area tops the list with $12 billion spent. Washington, D.C.; Los Angeles; Chicago; and Philadelphia follow (ranging from $4-$7 billion).
If you live in a metro market with higher home improvement spending, you're also more likely to fork out the big bucks ($50,000 or more). The top metro markets for the big spend? Boston; Washington, D.C.; New York; Providence; and San Jose.
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