During the Great Recession, many homeowners may have been more worried about hanging onto their homes than updating the décor. But apparently happy DIY days are here again, according to new research from Harvard University.
So join the trend and strap on your tool belt, because the Joint Center for Housing Studies estimates that spending on home improvement increased 9 percent in 2012 and could go up as much as 19.7 percent this year.
That could nail down the profits for companies such as Lowe’s Companies Inc. (ticker: LOW) and The Home Depot Inc. (HD).
Moreover, many folks bought older, foreclosed homes that look like, well, older foreclosed homes, and they’re joining the rush to rip out or refurbish stuff such as vintage-1980s kitchen cabinets. You can read all about it in “The U.S. Housing Stock: Ready for Renewal” and “The Leading Indicator of Remodeling Activity.”
“After limited spending during the housing bust, renovating the more than one million distressed properties that were sold in 2011 contributed nearly $10 billion to home improvement spending,” says Eric S. Belsky, managing director of the Joint Center. “With about three million more foreclosures and short sales in the pipeline, there is even more such spending ahead of us.”
Baby boomers turning their current homes into senior-style castles may account for a good share of the future home-improvement frenzy, too.
“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 percent. 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.”
For projections on what all this home improvement will add to a home’s equity, Bloomberg offers a slideshow on “The Real Cost of Home Improvement.”
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