The phones of home builders and remodelers have been ringing off the hooks recently, but none of them are complaining about their increased workloads! After all, when the economy crashed back in 2008, few industries were affected as badly as home construction was. Americans no longer had extra income to spend on remodeling, so they postponed all home improvement projects except the ones that were absolute necessities. Gone were the days when people would remodel the entire home, opting instead to only repair leaky roofs or to replace failing heating systems.
But now that the economy and housing market are recovering, homeowners are once again hiring builders to make renovations to their homes.
In fact, according to the Joint Center for Housing Studies at Harvard University, the jump in spending on home improvements actually started last year, when consumers spent $126 billion nationally. That was a 10% increase from 2011. The Center projects that spending on home renovations could increase an additional 20% this year, thanks in large part to a boost in the economy.
Home prices are steadily rising, the Dow Jones industrial average surged to a record high last week, the Labor Department reported that U.S. employers added 236,000 jobs nationwide in February, and the unemployment rate is at a four-year low. All of that leads to increased consumer confidence, and when homeowners feel secure about the finances, their job security, and the economy as a whole, they are more likely to spend some of their expendable income.
With home prices increasing, many Americans are choosing to spend some money sprucing up their homes so that they can put them on the market. They're calling contractors, interior designers, and architects – and they aren't just making minor repairs! Instead, many homeowners are paying for ambitious projects, like adding entire rooms, finishing basements, tearing down walls, and upgrading kitchens and bathrooms.
“There’s a sense of momentum,” said Stephen Melman, the Director of Economic Services at the National Association of Home Builders, when he spoke to the Boston Globe last week. “There’s still a lot of caution out there, but we’re definitely seeing more activity.”
Many builders say they've received more calls in the last month than they did all of last year. The increased workload means more money in their pockets, which is definitely good news for an industry that has struggled in recent years.
Builders aren't the only ones benefiting from the boost in home renovations, though. Building supply companies are reporting sales increases, architects and engineers say their services are in higher demand, and home improvement companies like Home Depot and Lowe's are opening new stores and hiring additional employees at locations around the country.
Of course, for all of those businesses to make money, someone has to be spending it, but homeowners who are undertaking remodeling and renovations are hoping for a big return on their investments.
In most major metropolitan areas across the nation, the housing market has become a seller's market. There simply aren't enough homes for sale to keep up with the number of people wanting to buy a home. This has led to multiple offers on the same home, high-dollar bidding wars, and higher home prices. Homeowners who want to sell know that now is the time to list their property, but many need to make some changes to their homes before putting them on the market.
The renovations and upgrades should pay off, especially since analysts expect a plethora of new listings in the months to come. They say many homeowners will be anxious to take advantage of the rising home prices, and the market could shift from a seller's market to a buyer's.
If that happens, any and all upgrades will be an added selling point!
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