During the recession many home owners saved their dollars, however, this year is forcasted to show an upswing in home improvement. Spending on remodeling probably will rise 9.2 percent to $125.1 billion in the first quarter from $114.6 billion a year earlier. A 13 percent increase forecast for April through June would be the largest jump in five years. which is good news for those in home remodeling Parma, Ohio and home remodeling Chagrin Falls, both areas that were hit hard by the recession. Home-improvement retailers are preparing for a spring sales bump as homeowners consider upgrading rather than selling their houses at a discount in a struggling market. These are signs of recovery in the economy are encouraging people to spend money on work they may have been putting off for years.
Spending on renovations may increase 3.5 percent annually through 2015. The data measured includes hours worked by remodelers and retail sales at building materials stores. The gain follows a decline that started in the third quarter of 2007 and sent spending to a six- year low of $112 billion in 2009.
New owners of discounted, foreclosed properties and a tax credit for energy-efficient windows and modifications will help drive remodeling demand. The bulk of spending during the next five years will be on replacements and upgrades rather than high-end projects.
The Residential Remodeling Index by Asheville, North Carolina-based BuildFax showed demand for remodeling rose 18 percent in December from a year earlier, the property data provider said Feb. 15. The index tracks the number of construction permits issued for home improvements in specific metropolitan regions.
Home Depot and Lowe’s, the largest U.S. home-improvement retailers, said they plan to hire additional seasonal workers during the next few months. Both companies in February reported fourth-quarter profits that exceeded analyst estimates, and Home Depot raised its earnings forecast for the year.
Improving employment and consumer confidence are drawing customers back stores.
The U.S. unemployment rate fell to 8.9 percent in February, the lowest in almost two years, the Bureau of Labor Statistics reported last week. Retail spending probably will increase 4 percent in 2011, according to the National Retail Federation.
Many people are holding onto their homes until the value can improve. While they are holding onto these properties they are putting some well deserved money into renovating.
Some property owners are stuck in their homes after falling values left almost a quarter of mortgage holders owing more than their residences are worth. U.S. home prices fell 2.4 percent in December from a year earlier and are down 31 percent from the July 2006 peak, based on the S&P/Case-Shiller index of values in 20 cities. A Chapel Hill Real Estate Agent was hopeful that the increase in home remodeling would eventually lead to improvement in the home sales market.
The negative equity may limit remodeling projects as it dries up a source of funding. Americans spent about $63 billion a year from home-equity loans on renovations during the 2000 to 2005 real estate boom.
Home Depot, the largest U.S. home-improvement retailer, said on Feb. 22 that earnings per share excluding some items will increase as much as 9.5 percent this year, up from a December forecast of no more than 9 percent. The company is hiring more than 60,000 temporary workers to handle an expected spring sales surge.
The average Home Depot purchase jumped 2.6 percent in the fourth quarter, the most in more than four years, though consumers are favoring smaller improvements and are still cautious about spending on major renovations.
Lowe’s plans to hire 50,000 seasonal workers this spring which is up from 43,000 a year ago.
The driving force behind this year’s spending increases will be baby boomers, the first of whom are reaching 65 and preparing their homes for retirement. Raleigh Homes and Cary homes in North Caroline are expected to see a small increase in home sales as the baby boomers look to relocate to desirable locations.