This is promising for our region in the remodeling industry. It appears as if many homeowners are opting to remodel their home instead of moving now.
The BuildFax remodeling index showed huge signs of growth, even in the Midwest Region. The index rose 29% year-over-year, the 22nd straight month. For the Midwest we rose 10.8% month-over-month gains.
Below is a chart from CalculatedRisk showing the increase in the BuildFax Remodeling Index.
Viewing the Economic Recovery Through Remodels
“As mortgage rates hit record lows, it is apparent that millions of Americans are refinancing their homes and using some of their new monthly savings to reinvest in their homes with remodeling projects,” said Joe Emison, Vice President of Research and Development at BuildFax. “With remodeling activity growing at an estimated 9.5 percent in 2011 compared to 2010, this is one segment of the economy that is showing continued strength, even as other sectors struggle.” “As millions of Americans believe that they will not be able to secure a new home due to a variety of factors including tight credit, limited buyers and challenging job prospects, they are more and more turning to renovating and remodeling their current properties, sending remodeling activity to record levels,” said Joe Emison, Vice President of Research and Development at BuildFax. “However, this remodeling boom is leaving many of these properties under-insured, as the value of these renovations are often not being captured by the homeowners’ insurance companies.”
I see this an encouraging sign for the housing market for several reasons. 1) this is an early sign of some consumer confidence in housing to invest back into their homes. 2) the housing inventory is getting updated, which will help the market place down the road. 3) this is putting many people in the construction industry back to work.