Improvements in home remodeling activity last year look to continue well into 2013, suggesting that recovery might already be underway, according to the Leading Indicator of Remodeling Activity (LIRA).
A product of the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, LIRA projects homeowner improvement spending will continue on its upward trajectory, reaching double-digit growth of nearly 20% through the third quarter of 2013.
While there are external and political risks that could derail the recovery, there have also been several factors that reinforce confidence in the budding market.
Older homeowners are retrofitting homes to accommodate evolving needs, says the JCHS, with home remodeling activity also driven by rehabilitation of foreclosed homes and the growing popularity of sustainable home improvements.
“As baby boomers move into retirement, they are increasing demand for aging-in-place retrofits,” says Kermit Baker, director of the Remodeling Futures Program. “A decade ago, homeowners over 55 accounted for less than one third of all home improvement spending. By 2011, this share had already grown to over 45%. And generations behind the baby boomers will help fuel future spending growth since echo boomers are projected to outnumber baby boomers by more than twelve million as they begin to enter their peak remodeling years over the next decade.”
Initiated in 1995, LIRA is designed to estimate national homeowner spending on improvements for the current and following quarters. By measuring an annual rate-of-change of its components, LIRA provides a short-term outlook of remodeling activity to help identify future turning points within the industry.
Written by Jason Oliva