Home flipping has been all the rage for a number of years now, especially during the time of ultra-low interest rates and that was proven by the number of reality television shows that focused on turning on dilapidated (or downright uninhabitable) fixer-uppers up to code and ended the show by revealing the amount of investment versus profit they claimed.
But according to a new article by Abbe Will, the Senior Research Associate & Associate project Director of Remodeling Futures for the Joint Center for Housing Studies at Harvard University (JCHS), spending for residential improvements and repairs is expected to shrink in 2004 for the first time since 2010 by the end of the year according to the.
This information comes via the JCHS’s Leading Indicator Remodeling Activity (LIRA). This report projects that declines in annual homeowner renovation and maintenance expenditure will worsen through the third quarter of 2024 before moderating slightly by fall 6.5% by the end of 2024.
Home remodeling will of course continue, as it is typically cheaper to renovate a home versus flatten it and start over, but will continue to suffer this year from a perfect storm of high prices, elevated interest rates, and weak home sales. These headwinds create considerable uncertainty in the economy, and remodeling spending is projected to fall from $481 billion last year to $450 billion in 2024.
Even with the anticipated downturn of $31 billion in remodeling revenue, spending for improvements and repairs to owner-occupied homes this year is expected to easily surpass the robust levels seen early in the pandemic some four years ago. Recent improvements in homebuilding and mortgage rates also support the prospect of turning a corner on the rate of remodeling spending losses by the end of the year.
Click here to see the report, and corresponding charts, in their entirety.
