The age-old law of supply and demand is very active in the home improvement market. The purchase of homes has increased as the country continues its way back up from the recession, but there are also obstacles (primarily economic) that are preventing a full force housing boom. While nothing is guaranteed, it is safe to say that where there is a home, there may be the need for remodeling services of some kind or other. Home improvement is therefore more or less on an even track as this week’s blog explains.
The outlook for the future of home sales is a bit divided. Affordability is an obvious issue for some people, and the price of buying a home is increasing by 5% for this year. This is Many younger people are opting to rent instead of buy. In spite of this, for those who can benefit from the improvements in the economy, home sales are expected to increase by 30-40% – at least for this year. And as more homes are bought and sold, the services of more home improvement professionals will be required.
There is additional hopeful news on the horizon. Since the end of the recession, the home improvement industry has maintained a healthy (if not booming) growth. With the projected, albeit slow, improvement in the U.S. economy (at 3.1%), combined with a decrease in unemployment, sales in housing are expected to increase. And if house sales increase, it follows that home remodel services of any and all kinds will be in demand. Here is where the situation gets even better: people who own a home but are looking to sell will often have either minor or major remodeling improvements made so that the house will look more appealing to potential buyers and also increase its return on investment. Then, when the house is sold, whoever buys it might have additional changes made to suit his or her tastes, whether it’s new cabinetry for the kitchen or a complete bathroom remodel. So, in a nutshell, regardless of whether a home is sold or bought, it means that business will be steady for home improvement professionals.
The expression that “timing is everything,” has certainly been the case for home sales. After the recession, for the purpose of stimulating economic activity, interest rates on new mortgages were very low. Rates were expected to rise to a dramatic 5% by the end of last year, but factors that included international crises and an overall slow worldwide economic growth led to an increase of only 3.87%. Interest rates are nevertheless expected to rise as the year progresses, which may well account for what the Mortgage Bankers Association reported was an increase of nearly 50% in home loan applications that took place this past January. Essentially, to avoid the predicted higher rates in the future, home sales are escalating in the short run. (As of April 16, according to Bankrate.com, the rate was at 3.80%, so if you are considering buying a home, now might well be the time.)
Another factor that may prove optimistic is the population; specifically in regard to generations. The now 50-to-69 year old “baby boomers,” once the largest age demographic, are passing this mantle to the 18-to-34 year old “Millennials” who are predicted to outnumber the boomers this very year. The older generation, generally, are more open to having remodeling projects performed on their homes than they are to relocating. As stated earlier, although more young people are likely to rent a home, this is hopefully a transitional period in their lives until they can build up enough capital to purchase a house.
Overall, job prospects for carpenters, painters, and other home improvement professionals are in a relatively healthy place. According to the Joint Center for Housing Studies of Harvard University, the average annual rate for growth in home improvement services is 3.5%. This, in combination with the upward economy (however slow it may be), is a good sign that so long as people of all ages are going to buy or sell their homes, there will be a need for any number of construction, painting, and remodeling contracts.
If you are selling your home, or are moving into that new place you’ve just bought and are considering some renovations – namely, a kitchen or bathroom remodel, consider contacting Granite Transformations. We provide a free in-home consultation for whatever your home improvement project might be. So, a free in-home consultation, combined with the increased value a remodeling job could bring to your home – will earn ultimately earn money for you in the long run.