Remodeling is on the rise according to the NAHB Eye on Housing. Let’s look at the influences of this trend. It may be surprising how correlated the construction trends really are.
According to the NAHB, the Remodeling Market index (RMI) is showing to be the highest since the first quarter of 2004 at 57. An RMI above 50 indicates that more remodelers reported that market activity is higher (compared to the prior quarter) than those that reported it is lower. This includes major additions and alterations; minor additions and repairs; and maintenance and repair.
In a September post on GlassBlockBlogger called New Construction on the Rise and Home Owners Have Modern Expectations, we spoke of the slow but steady improvement in new single family home construction that started in early 2012. In October, the National Association of Realtors stated that existing-home sales have been “…hitting the highest level in nearly four years…”.
So, who is generating all of this activity? The What’s Trending in Real Estate article says that “Generation X—those ages 33 to 47—made up the largest chunk of home buyers, at 31 percent, between July 2011 and June 2012…”. This generation generally has a growing family with equally growing needs. When a family buys a home, either new or existing, changes are often made to the home by the new home owner.
Housing Economics says that a home purchase triggers a series of additional spending on appliances, furnishings, and remodeling activities that exceed typical spending levels of non-moving owners and persist for two years after moving. Specifically, the NAHB analysis shows that during the first two years after closing on the house a typical buyer of a new single-family detached home tends to spend on average $7,400 more than a similar home owner who does not move, including $4,900 in the first year after purchase. Likewise, a buyer of an existing single-family detached home tends to spend about $4,000 more than a similar non-moving home owner, including $3,600 during the first year.
In addition, remodeling trends also get a boost from the seller of the home. The seller will remodel to make the home more attractive and to increase its value.
So, the trends in home sales have a direct effect on remodeling activity.
However, there is another influence on this trend. There is the rising price of existing homes. The rise in the value of a person’s home increases home equity that owners can tap to finance remodeling projects that they always wanted. The people that stay in their homes are also making improvements using equity that may not have existed several years ago.
The rise in remodeling is directly affected by several related improvements in the overall real estate market.
Whether you are selling, buying, building new or remaining in your current home, consider the security, energy savings and beauty of glass block. Call us at Eastern Glass Block. We have over 20 years of experience in new and existing residential construction. We love to share our experience. PH: 800.635.1226