Despite a boom in new construction and some recent sales softness, the home remodeling business will accelerate in 2003 and pick up momentum through the end of the decade, analysts say.
“We may see a bit of a pause” in the 2003 first quarter because of the uncertain economy and international situation, said William Apgar, senior scholar at Harvard University’s Joint Center for Housing Studies. “But there is a strong outlook for remodeling just as there is a strong outlook for housing” this year.
The $214 billion a year home improvement industry grew about 2 percent in 2002 and will double that this year, Apgar said.
Though a slower growth rate than the 8 to 10 percent gains made in 2000 and 2001, these are solid increases in light of weak job growth and flagging consumer confidence, said Kermit Baker, senior research fellow and Apgar’s colleague.
“There already is some evidence of mild acceleration as we move into 2003,” Baker said.
The Harvard economists spoke Friday at the International Builders’ Show sponsored by the National Association of Home Builders.
Expenditures to improve, maintain and repair the nation’s 119 million homes totaled $214 billion in 2001, or 2.1 percent of the nation’s total economic activity, which the NAHB said is bigger than the commercial real estate business or the amount spent on public works.
Chicago-area remodelers attending the convention echoed the economists’ sentiment.
“This is the busiest fall I’ve had,” said Mike Nagel, president of Remodel One Inc., Roselle, a commercial and residential remodeling business with $2 million in annual sales.
“The stock market is down and money is cheap” so owners are investing in homes, he said. And Nagel foresees no slowdown in 2003 “unless there is another major terrorist attack.”
Not everyone was upbeat, however.
Peter Sciaretta and Doug Horn, vice presidents of Hemingway Construction Corp., Greenwich, Conn., said business is “not good” and they are “not expecting anything until 2004.”
“High-end construction is soft,” Sciaretta said. “So much in our area is tied into Wall Street and how that is doing. And when the economy is tough, people take longer to sign contracts.”
Nationally, remodeling is increasing its share of total residential investment and now equals about 40 percent.
In the Midwest, remodeling accounts for just under half of the investment in single-family homes in both central city and rural areas and about one-third in the suburbs.
