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Remodeling Market Slows, Maintenance and Repairs to Remain Strong
Remodeling activity slowed in the second quarter of 2006, according to NAHB's Remodeling Market Index (RMI). The current market conditions index decreased from 48.1 to 45.6 and future expectations moved from 48.9 to 43.5.
The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number over 50 indicates that the majority of remodelers view market conditions as improving.
“We expected lower sentiment as the overall housing market slows, and the second quarter numbers certainly reflect that,” said Remodelors™ Council Chairman Vince Butler, CGR, CAPS, GMB. “However, the remodeling market should perform relatively well as the overall housing market slows.”
The RMI component for owner-occupied units moved from 53.8 to 49.0 in the second quarter, while the component for renter-occupied units increased from 36.7 to 39.0 during the same period. In the future expectations index, the component for owner-occupied units moved from 53.2 to 47.2 and the renter-occupied component decreased from 30.4 to 28.8. Rental-property remodeling accounts for a third of all remodeling expenditures.
“Remodeling is less volatile than new home construction partly because nearly half of all expenditures represent non-discretionary maintenance and repair projects,” said NAHB Chief Economist Dave Seiders. “The average age of the housing stock is 32 years and rising – well past the time when major home systems need replacement. Supported by more than $11 trillion in homeowner equity, the fundamentals of the remodeling market will remain strong for the foreseeable future.”
The RMI “special questions” section asked about aging-in-place home modification trends. Of remodeling companies surveyed, 60 percent modify homes for aging-in-place needs. Asked to identify the age of clients, 76 percent indicated that they have clients aged 55-64, 67% had clients aged 65 and older, and 43% had clients aged 45-54. Additionally, 75% of remodelers reported increasing requests for aging-in-place features.
Asked to identify the main reasons that customers requested aging-in-place modifications, 75% of respondents said their clients were planning ahead for future needs. Other reasons included living with older parents (53%), acute age-related disabilities (46%), and acute non age-related disabilities (23%). The majority of aging-in-place work is determined by the client (66%) as opposed to being suggested by the contractor (34%t). Only 4% of remodelers found potential clients not receptive to suggested aging-in-place modifications.
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