For clients looking to enhance their property for sale or make that new purchase seem more like home, remodeling remains the best way to make a house a home. If growth in remodeling is any indication, homeowners are looking at one or two large projects.
When the housing industry was hit by the Great Recession, remodeling saw less of an impact. Even as some small builders were struggling for business, home remodeling received a slight boost by an economic stimulus package form the Obama administration that included tax benefits for remodeling projects.
Those benefits expired in 2011 and remodeling stalled, but it has recovered more quickly than new residential construction.
According to the AIA Home Design Trends survey, remodeling still accounts for the largest share of business activity in sectors responsible for work at architecture firms.
In fact, in its annual Cost. Vs. Value report, Remodeling found kitchen remodels and additions are among the most expensive home improvements.
The average cost of a two-story addition is $176,108, according to the survey, up nearly 3 percent over last year. A major kitchen remodel is $62,000, up 3.6 percent.
A more affordable remodeling option is the bathroom, at $18,546, more than 3.5 percent higher than 2016.
As demand increases for the pricier remodeling projects, that is good news for remodelers. In fact, the latest RRI release indicates that 2017 will be a busy year for the remodeling sector, with remodeling activity expected to rise by 4.4 percent.
Agents also need to be aware of an early start to the remodeling season this year, a result of the mild winter in many regions.
The National Association of Home Builders released its Remodeling Market Index, which increased to 58 in the first quarter of 2017.
This is an increase of five points from 2016 and the highest reading since 2015.
“A milder than usual winter has led to increased remodeling activity and a positive outlook for spring,” NAHB Remodelers Chairman Dan Bawden said. “Remodelers are seeing stronger market conditions with customers more willing to spend money on both small and large projects.”
As agents look forward, there are two key trends of note to put you in position to meet your clients needs, and they involve baby boomers and millennials, two cohorts are expected to drive renovation spending in the coming years.
As many boomers remodel for ease of accessibility, analysts predict the demographic could account for more than half of spending in the sector by 2025. That’s up from 31 percent of remodeling spending in 2005.
Millennials will likely drive remodeling spending by purchasing homes in need of renovation and concentrating those projects on energy-efficient features, healthy materials and smart-home systems.