Home improvement spending booms

February 21, 2014, 8:51 pm

(NECN: Peter Howe, Boston) Even as the government reported an unusually steep one-month drop in home sales in January - perhaps affected by terrible weather coast to coast - one area of the housing market is booming and growing far faster than the economy as a whole: Home improvement and remodeling.



One way you see it is robust attendance for this weekend's 64th annual New England Home Show at the Seaport World Trade Center in Boston, where thousands of people with $12 to spare for admission can dream some big dreams about upgrading their homes inside and out - from lightswitch covers to lighting to luscious artificial lawns, lap pools, and outdoor living lofts for the kids.



'There's a lot of pent-up demand from households that weren't doing projects during the downturn, a little bit nervous about taking on new debt,'' Kermit Baker, a senior research fellow at Harvard's Joint Center for Housing Studies and project director of its Remodeling Futures Program, said in an interview Friday.



The Harvard center is predicting a second straight year of 10 percent-plus spending in U.S. home remodeling spending this coming year. Overall home-improvement spending of all kids is forecast by the Home Improvement Research Institute to grow 6.8 percent this coming year to nearly $313 billion in 2014. And industry experts Hanley Wood said a survey of U.S. home remodelers found 45 percent of them expect to see revenue growth of 10 percent or more this year, with just 4 percent - many fewer than last year - expecting their revenues to drop.



In New England, Baker said, big drivers of home remodeling and upgrade spending include homeowners investing in energy efficiency, healthier indoor air (by replacing carpeting or insulation or repainting), and investors upgrading houses to accommodate demand for rental housing that is much higher than it was before the 2008 meltdown tanked housing values and led to much toughened requirements for mortgages.



'We're seeing more interest in home automation as technology is improving,'' Baker said, 'but i think the single biggest driver is the aging of the population. Baby boomers are turning 65, and they need to retrofit their homes so they can stay in them as they age.'' That can include creating first-floor bedrooms or making bathrooms and kitchens easier for people with mobility impairments to use.



Home show participants Charlie Ball and Dustin Leclair, Realtors with Century 21 Commonwealth, which has 19 sales offices around metropolitan Boston and Cape Cod, said they expect heavy traffic at the show from people selling their homes during the busy spring selling season who want to sharpen up their curb appeal.



'Landscaping, the front door, the mailbox -- those are all little things that make a really big impression when someone's looking at a house for the first time,'' Ball said. Once inside, Leclair said, 'painting and refinishing hardwood floors, bathrooms [and] kitchens'' are projects that can quickly recoup their value in terms of raising the selling price of a home or getting it under contract with a buyer faster.



Ball and Leclair said they also see strong signs of more people staying put, feeling enough home wealth again to upgrade, now that thousands of homeowners who were 'underwater' on mortgages or had close to zero equity have seen values appreciate enough in the last three years to give them more confidence about investing in their home or equity to tap for a home-improvement loan.



'You can see it here, people who didn't have the equity that they used to have and maybe weren't comfortable spending money for those extra big projects, and now we're definitely seeing it,'' Ball said. 'When people feel like they have equity in their house, they spend money on stuff.''