There is no secret that the pandemic has prompted many homeowners to seek more space, oftentimes leading them to single-family homes in suburban areas. Of course, with so many Americans sharing this same idea the market has become quite competitive. With housing inventories at record low levels, many homeowners are opting to simply remodel their existing homes.
Leading Indicator of Remodeling Activity (LIRA)
The Leading Indicator of Remodeling Activity (LIRA) released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, projects that year-over-year gains in annual improvement and repair spending will reach 9% in Q4 of 2021. Furthermore, this pace of remodeling is expected to continue into 2022.
In addition to tight housing inventories, another driver of the remodeling push is the rapid expansion of homeowners’ equity. With home values rising at a record-setting pace, many homeowners are even opting to tap into this equity to fund home improvement projects.
Summary
Although more homeowners are opting to remodel their homes, there are still some headwinds in doing so. As record setting inflation continues to set in, we are seeing dramatically higher costs for both labor and building materials. In addition, higher interest rates will also impact those that may be financing their remodeling projects.
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