Home Remodeling is Surging as Property Values Rise
Confidence Rises, Remodeling Surges
Not that this information should come as any surprise, but investors, flippers and homeowners alike are coming back in full force, as shown by the numbers in remodeling costs.
The National Associate of Home Builders has reported a major jump in their Remodeling Market Index. The index, which measures the amount of the remodeling activity that is taking place in properties across the country, rose 5 points in the last quarter to a score of 50 – the highest it has been since 2005.
The higher level of remodeling activity has been reported most in homes occupied by an owner, proving that more homeowners are responding positively to increased property values and a healthier housing market.
The remodeler’s chairman of NHAB, George Moore Jr., said the strength of the housing market and stability or property values has led homeowners to invest in their houses once again. In the middle of the housing crisis, most homeowners were putting off large remodeling projects. Rock-bottom values and decreasing home prices meant that investments would not hold their value, according to Moore, leading to major losses for the homeowner and little to no change in the property’s value.
So where is the most money being spent?
The index takes a look at three key remodeling categories. Surprisingly, the biggest jump from the previous quarter was in “major additions and alterations,” increase seven points from 42 to 49. “Maintenance and repairs” continued to lead the pack, jumping six points from 50 to 56. “Minor additions and alterations” went up four points to 51.
Although major remodeling projects (those costing $25,000 or more) are still behind smaller projects the index, a jump of seven points in just three months shows the amount of confidence that homeowners now possess. That confidence is seemingly leading to larger investments into their homes, and a greater desire to increase their property value even more.
Kitchen and bathroom modeling are among the most common, with floors and countertops often being projects that need to be taken care of first. Cheaper materials and new ways to save on installation expenses are also beneficial.
Coming out of the housing crisis, property values have stabilized, but it’s the investments of homeowners to improve their homes and lend a hand to increasing their property values that may prove to have the greatest effect on the housing market overall. As more homeowners gain back their confidence in a growing market, it will be interesting to see if this trend continues, which I think it will.
What do you think?
This content was posted by Tracy “Royce of Real Estate”. You can read other articles on www.RoyceofRealEstate.com/blog or this blog on Bigger Pockets.
Tracy is an Arizona Short Sale Realtor, Investor, Rehabber and Foreclosure Expert. She is also an avid blogger, vlogger, and consultant on all things Arizona Foreclosures.