2015 Remodeling Industry Forecast

Presented by Kermit Baker, The Joint Center for Housing Studies, Harvard University

Posted by Meghan Landry, F. D. Sterritt Lumber Co. on 9 April 2015 | 0 Comments

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April Fool’s Day was filled with facts… no joking matter, but we shared a few laughs early on in the night.  Special thanks goes to our dinner meeting sponsor, Audio Concepts, who filled our evening with great music and interesting technology tips and trivia!

Early arrivals got a chance, before dinner from 5-6PM, to earn a CEU toward their CSL renewal. Audio Concepts sponsored a course on Residential Lighting Control by LUTRON with information on how to plan for lighting needs that enhance energy efficiency and client comfort.

For the main event at April’s EM NARI Dinner Meeting, the hot topic was the 2015 Remodeling Industry Forecast with Kermit Baker of Harvard University’s Joint Center for Housing Studies.  At the start of the presentation, Baker jumped right into the numbers. The industry as a whole looks different since the recession. We are all working in a very different segment since 2006. However, home improvement spending is expected to increase in 2015 and be fully recovered by the end of the year. Better times are coming people!

JCHS 2015 Forecast Report Findings

Here are a few things you’ll see happening in the biz this year:

Changing household demographics

  • Baby boomers continue to dominate spending. While millennials still account for only a small share of the market.
  • Baby boomers are still the primary drivers of home improvement spending. Generation X is gaining strong momentum.
  • Many of the homes owned by older Americans lack the accessibility features that enable an aging place. This is one of the fastest growing segments of the remodeling market now.

Structure of industry and labor trends

  • Larger contractors have seen sharp rebound in revenues. (More than 1.5 million)
  • The construction workforce differs from the overall labor force in several key areas. In 2013 the share of the labor force that are women: 47.3% all industries and only 2.5% in construction.
  • After the downturn, the construction industry included a smaller share of younger workers.  Younger workers left the industry during the recession and have not returned.  This suggests a continued long term labor shortage in the industry.

Workers under 35 in 2007 = 42.9%.

Workers under 35 in 2013 = 34.8%

Capital spending on apartment units on the rise

  • Younger individuals know you can lose money on home buying.
  • More single people are now buying apartments than homes. Downtown settings are popular and real estate is appealing here.
  • Owners in coastal metro areas generally spend more on home improvements. In 2013 the biggest spending on home improvements was in Washington, D.C. (Boston ranked #2.)

Sustainability

  • Sustainable home improvements still remain a popular niche; energy efficiency upgrades are most common. While others, i.e. FSC wood, are also developing momentum.
  • 25-30% all renovations are currently “green.” However this does not include kitchen and bath remodel.

DIY Projects

  • This is the first time in a decade DIY Projects are up. For those of you who do not know what DIY means. It just means “Do-It-Yourself”.

Home prices continue to recover (having gained back 60% of their losses…this seems promising). The market has clearly gained acceleration this year (having gained a mid-single growth % nationally). In 2013, nearly $300 billion was put back into the remodeling market. With these numbers I think it is safe to say, the market is nearly recovered. The forecast gave us some inspiration and motivation with a vision for a strong home improvement market here in Greater Boston for 2015! Now let’s start remodeling!

To obtain a copy of the full presentation slides, email us at admin@emnari.org.

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