RISMedia's Real Estate Magazine

APR 2017

Real Estate magazine is the industry's leading source for real estate news and information since 1980. Published monthly by RISMedia, Real Estate magazine offers timely and relevant real estate news to the industry's top brokers and agents.

Issue link: http://remag.rismedia.com/i/805428

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Page 45 of 134

RISMedia's REAL ESTATE April 2017 41 The report, Demographic Change and the Remodeling Outlook, proj- ects remodeling spending to grow an average of 2 percent each year through 2025, driven primarily by rising home values and incomes. Homeowner and renter spending on remodels hit a record $340 billion in 2015. "With national house prices ris- ing sufficiently to help owners re- build home equity lost during the downturn, and with both household incomes and existing-home sales on the rise, we expect to see continued growth in the home improvement market," says Kermit Baker, director of the Remodeling Futures Program at the Joint Center. Baby boomer homeowners will fo- cus on improvements that support an aging-in-place lifestyle, according to the report, spending the most of the three generations at a 56 per- cent share. Millennial homeown- ers—with limited resources—will move to upgrade for automation and energy efficiency. The majority of remodeling spend- ing occurs in housing markets with high home values and incomes—a derailing trend, if affordability pres- sures continue to hamper millen- nial home-buying. In still-affordable Cincinnati and Detroit, for example, remodeling spending by millennials was more than double that in Los Angeles and San Francisco in 2015. Millennial owners of houses built before 1980 spent 16 percent more than the national average in 2015. In 2017, remodeling spending over- all is projected to increase the most in the East and Midwest. Other shifts, however, could have a softening effect. The share of home- owners 65 and older—who typically spend less on remodeling—will grow in tandem with other generations, along with minority homeowners and homeowners without young children, who also spend less. "Despite these challenges, the re- modeling industry should see numer- ous growth opportunities over the next decade," says Chris Herbert, managing director of the Joint Cen- ter. "Strong demand for rental hous- ing has opened up that segment to a new wave of capital investment, and the shortage of affordable housing in much of the country makes the stock of older homes an attractive option for buyers willing to in invest in upgrades." RE For more information, please visit www.jchs.harvard.edu. Boomer, Millennial Homeowners to Drive Remodels Over Next Decade G enerational shifts are set to give rise to more investment in remodeling, as baby boomer homeowners adopt accessible living, Gen Xer homeowners complete put-off projects and millennials become homeowners, according to a recently released report by the Harvard University Joint Center for Housing Studies. Higher remodeling spending broadly signals confidence in the economy, household finances and the housing market.

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