Experts predict rise in U.S. home renovations

TRD MIAMI /
Feb.February 01, 2013 12:00 PM

Homeowners have been hesitant to open their wallets for renovations, but a new study shows that spending on home improvements is set to accelerate through at least the third quarter of 2013, the New York Times reported. The projections reflect rising home sales and construction, and low financing costs, said Kermit Baker, director of the Remodeling Futures program at Harvard University’s Joint Center for Housing Studies, which conducted the study.

“All the elements are sort of pushing in the same direction,” Baker said.

While spending on improvements and maintenance has been down since 2007 when it peaked at $328 billion, in 2012 it very likely rose about 12 percent, according to the center’s data.

Mark Yecies, an owner of SunQuest Funding in Cranford, N.J., told the Times that construction loans for major additions are especially hard to come by, because lenders typically require that borrowers have 25 percent to 30 percent equity, based on the finished value.

Borrowers with negative equity — or with houses worth less than their mortgage balance — cannot get any sort of improvement loan, Yecies noted.

Greater equity, however, leads to more spending on home improvements. According to the Harvard study, homeowners with at least 20 percent equity spend an average of 22 percent more on improvements than homeowners with lower equity levels.

The decline in home values during the last decade will benefit the remodeling industry in the next decade, the Times noted. Tom O’Grade, the chairman of the strategic planning and research committee of the National Association of the Remodeling Industry, predicted that as baby boomers head toward retirement, more will probably decide to renovate rather than sell or buy. [NYT]Hayley Kaplan  


Related Articles

arrow_forward_ios
Aria Mehrabi and renderings of the projects

Target-anchored mixed-use project planned for North Beach advances

Target-anchored mixed-use project planned for North Beach advances
Dan Azel with 8900 Southwest 107th Avenue and 10700 Southwest 88th Street (Credit: Google Maps)

Construction honcho pays $17M for Kendall office buildings

Construction honcho pays $17M for Kendall office buildings
August construction starts rose in South Florida

South Florida construction starts rose in August

South Florida construction starts rose in August
Alan Faena, Len Blavatnik, Faena House (Credit: Faena House via Miami Herald)

Faena House condo association sues developer, contractor over alleged construction defects at ultra-luxury tower

Faena House condo association sues developer, contractor over alleged construction defects at ultra-luxury tower
695 Olive Avenue, West Palm, and a rendering of Canopy Park at 500 Alton (Credit: Google Maps)

South Florida construction starts show short-term recovery in July

South Florida construction starts show short-term recovery in July
(iStock)

SoFla construction starts plummet 54% in June

SoFla construction starts plummet 54% in June
Lennar's Stuart Miller

Homestead homeowners association sues Lennar, alleges shoddy construction

Homestead homeowners association sues Lennar, alleges shoddy construction
Bay Harbor One

Bay Harbor One buyer sues to get out of condo deal, citing alleged defects

Bay Harbor One buyer sues to get out of condo deal, citing alleged defects
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...