Old and Young Homeowners Drive Remodeling

Homeowners of all ages - Boomers, Gen-Xers and Millennials - contribute to the growth in remodeling and home improvements in the coming years.

By Gene And Katie Hamilton

Old and Young Homeowners Drive Remodeling

A recent report from the Harvard Joint Center for Housing Studies says spending on remodeling is expected to grow through 2025. Older owners are adapting their homes to make them more accessible so they can stay in place and millennials are poised to enter the remodeling market in greater force by buying up older, more affordable homes in need of renovations.

The residential remodeling market includes spending on improvements and repairs by both homeowners and rental property owners, and reached an all-time high of $340 billion in 2015, surpassing the prior peak in 2007. Spending by owners on improvements is expected to increase 2.0 percent per year on average through 2025 after adjusting for inflation, just below the pace of growth posted over the past two decades, and about on par with expected growth in the broader economy.

The large baby-boom generation has led home improvement spending for the past twenty years, and its influence shows no signs of waning. Older homeowners will continue to dominate the remodeling market, as they make investments to age in place safely and comfortably.

Gen-Xers are now in their prime remodeling years, and while some are still recovering from home equity losses after the housing crash, many in this generation will undertake discretionary projects deferred during the downturn. And as younger households move into homeownership, they will supplement the already thriving improvement market.

"With national house prices rising sufficiently to help owners rebuild home equity lost during the downturn, and with both household incomes and existing home sales on the rise, we expect to see continued growth in the home improvement market," says Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies.

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