Home remodels have increased in the past 5 years because baby boomers, instead of buying a new house, are electing to renovate their home due to the rising prices of real estate.
Home remodeling has surged by about 30% in the past five years, according to a report from BuildFax, a provider of property condition and history insights for insurance and financial institutions.
“We are not seeing a large bounce back from the decline in June housing authorizations,” BuildFax Chief Operating Officer Jonathan Kanarek said. “However, we have to remember that all three categories, new housing, remodels, and maintenance, are at historically high levels.”
Kanarek also added that “Remodeling alone is up 30% in the last five years. The slight dip in remodeling volume may be an early indicator of a leveling off of the very hot housing construction market we’ve seen in the last few years. We will be keeping a close eye in the coming months to look for the leveling off trend or a further softening.”
The report showed that single-family housing authorizations increased by just 0.62% from June to July, and by a seasonally adjusted annual rate of 4.77% since July 2017.
However, existing housing maintenance increased at a much faster pace. The annual rate of housing maintenance volume increased by 5.23%, while housing maintenance spends increased at an annual rate of 8.04% in July.
The annual rate of existing home remodels dropped slightly from last year, falling 0.26%, however, remodel spend increased at an annual rate of 8.96%. Homeowners are still willing to spend money on improving their home.
The market shows that homeowners are more willing to remodel, rather than just buy a new home. Earlier this week, home improvement retailer The Home Depot reported an increase in its sales during the second quarter of 2018 as more homeowners choose to age in place and renovate their homes rather than move into a newer home.
The construction industry continues to struggle even as the home improvement sector rises. The latest data from the National Association of Realtors shows job openings in the construction industry hit a post-recession high in June, but no new laborers are stepping up to fill the gap.
As the construction industry fails to keep up, and the median age of owner-occupied homes increases, it has caused a surge in the remodeling market, according to the latest data from the National Association of Home Builders.