Because the majority of homeowners have purchased or refinanced at low rates, many are looking to use the cash saved to add value to their homes rather than trade up, a panel of experts convened by the Joint Center for Housing Studies (JCHS) of Harvard University predicted
According to The Demand Institute, homeowners across the country will spend more than $700 billion in renovating their current homes during the next five years. In 2015, home improvement spending is expected to exceed in 2015 the record of $324 billion set during the peak of last decade's housing boom, according to JCHS.
Don't let your clients walk away from that fixer-upper
More than 78% of households in the U.S. are in need of repairs. The Demand Institute recently reported there is a 26% satisfaction gap between those who say it’s important and those who say their house is up to par. The five home improvement tasks that are likely to happen in the next three years are painting walls—30% say they will complete, replace carpeting/flooring (25%), remodel bathroom (20%), remodel kitchen (18%) and replace windows/doors (17%).
The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) posted a record-high result of 60 in the final quarter of 2014. The reading level indicates remodelers’ confidence in the quarter-over-quarter improvement in the remodeling market.
An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.
“The recent pace and volume of business has been a boon to our remodeler members’ confidence in the recovery of the housing market,” NAHB Remodelers Chair Paul Sullivan, CAPS, CGR, CGP, of Waterville Valley, New Hampshire, said. “The upward trajectory of the RMI results over the past year has shown that home owners are ready, willing and deciding to remodel.”
The 203k loan program can help borrowers purchase or refinance home
in need of some improvement. One of the biggest benefits of 203K loans is that borrowers can obtain a single loan at a long-term fixed or adjustable rate.
Another renovation loan program, the HomeStyle, will cover most of the same repairs as a 203K, but adds more flexibility for borrowers to make exterior changes and allows for luxury items like a new pools, spa or exterior kitchen. Many use the program to renovate their vacation homes or investment properties.
Since the financial crisis, the United States has experienced record low mortgage rates, so it should come as no surprise that many economists are predicting rates to increase sooner rather than later. The expected rise is something many experts say should move more money toward remodeling projects.