Homeowners Turn To Remodeling

Building material prices were up 23 per cent over the last year, in part due to a surge in U.S. remodeling activity driven by three primary conditions: high home equity, few ‘trade-up’ homes available, and rising mortgage rates, says John Burns Real Estate Consulting (JBREC). A report from JBREC authors Matt Saunders, senior vice-president, building products research and Eric Finnigan, director, building products, says remodelers have never been busier. Almost half (48 per cent) of homeowners are doing more projects than one year ago, and 65 per cent are doing projects are larger than one year ago. The authors believe that existing home sales will decline in 2022, given continued extremely tight inventory and a payment shock from rising mortgage rates. “However, even with a decline in existing home sales, we forecast continued growth in remodeling spending, especially on large, professional contractor-intensive projects.” Going forward, longer-term structural factors will drive remodeling demand, assisted by shorter-term cyclical drivers, including wealth from home equity, age of the existing housing stock, home price appreciation, reduced mobility for the majority of owners who will stay in their home, and continued spending from remodels currently in progress.