Home improvements and remodeling — a big and growing market

According to estimates by Harvard's Joint Center for Housing Studies, about 41 million homeowners took on almost 100 million improvement projects between 2000 and 2001. Nearly two-thirds of them involved replacing structural elements or major systems. In the same time period, homeowners also made 7.6 million room additions or alterations, which included decks and porches. That's a lot of American householders sprucing up their homes.

The trend shows no serious signs of stopping, according to the center. JCHS figures show homeowners spent an estimated $125.8 billion on home improvements and repairs in the second quarter of 2004. Spending increased 4% over the same quarter of 2003. For the past four quarters, total spending is estimated at $493.6 billion, up 2.5% over the same time periods in 2002 and 2003.

"Job growth and increasing payrolls have enabled homeowners to undertake more discretionary remodeling projects," said Nicolas P. Retsinas, director of the JCHS. "Higher mortgage rates have not yet slowed home sales and homeowners are feeling more confident about the outlook."

For the full year, the National Association of the Remodeling Industry projects remodeling spending in 2004 will increase 5% over the 2003 level. NARI estimates more than a million homes per year undergo major renovation or remodeling. The popularity of television shows such as Trading Spaces has bolstered the courage and swelled the ranks of do-it-yourselfers.

As to why consumers remodel, there are two major reasons: to update their homes to fit their tastes or the latest trends, or to address the changing needs of their families. Lower on the list of reasons is the desire to increase a home's market value and the need to accommodate a home business or professional work at home. Those are among the findings of NARI's 2004 Homeowner Remodeling Survey, conducted by Northwest Survey Data and Elkay of homeowners who had remodeled in the last five years.

According to a new study released at the 2004 National Hardware Show by Reed Exhibitions and conducted by the Tampa-based non-profit Home Improvement Research Institute, a majority of homeowners make improvements to their homes within the first year of purchase, spending more than $4,900 during that first year. Buyers of older homes spend an average of $3,600, while those who bought new homes spend an average of $7,000. Owners of older homes most frequently cite a desire or need to replace worn-out or old materials, while owners of new construction are most often seeking to beautify the house. Purchasers of both types of homes report that they did improvements to support new features and change the decor.

Many consumers also make improvements to their homes when preparing to sell them, according to the Reed/HIRA study. Kitchens, bathrooms and living rooms are the most likely interior spaces to be improved in both newly built and existing homes. Owners of newly built homes are also likely to do landscaping projects.

Quality wins out over price as the most important aspect of a remodeling job, according to homeowners participating in the 2004 Homeowners Remodeling Survey. Among the findings were that "do-it-yourself-ers" primarily take on remodeling jobs because they enjoy the work, but they are more likely to hire a remodeling professional for more intensive or costly projects.