HOUSTON – (By Dale King, Realty News Report) – The U.S. home remodeling market has surged more than 50% since the end of the 2007–2009 Great Recession, according to a report from Harvard University’s Joint Center for Housing Studies.
Locally, Houston and surrounding areas have reflected that growth, say owners of two regional remodeling firms. Dan Bawden, owner and president of Legal Eagle Contractors in Bellaire, reports a marked shift toward larger projects. “About 10% of the calls we used to get were for whole-house projects,” he said. “Now it’s 75 to 80%. When the phone rings for remodeling, there’s an 80 to 90% chance it’s going to be something big.”
Leslie King, founder and owner of Greymark Construction in Houston, describes a similar trend. “Housing prices in Houston have long been affordable, but in the last four years values have taken off, and our business has too. Home values today justify spending $75,000 to $100,000 on renovations. It wasn’t like this before.”
Harvard’s Remodeling Futures Program finds that new home construction has struggled to keep pace with housing demand, while spending on improvements and repairs reached a record nearly $426 billion in 2017 for both owner-occupied and rental properties.
The study also reports that nearly seven million rental and vacant units were converted to owner-occupied housing in 2016 and 2017, with owners investing roughly $50 billion to improve those properties.
Abbe Will
Abbe Will, associate project director of the Remodeling Futures Program, notes that while new residential construction is slowly recovering, the existing housing stock is aging. “The aging of the housing stock has been a boon to the remodeling industry,” she said, adding that spending on improvements has outpaced homebuilding investment every year for a decade and contributed 2.2% to U.S. economic activity in 2017.
The report points out additional drivers of remodeling: steadily rising house prices in many markets and an aging population. Homeowners staying in their houses longer build equity over time and often tap that equity to fund major renovations — including accessibility upgrades that help older adults remain safely at home. Households aged 55 and over now account for half of all homeowner improvement spending.
The Harvard report contains numerous findings, summarized here:
Spending by rental property owners has increased sharply. The post-crisis rise in rental demand led many landlords to invest in substantial upgrades to their units.
Over the next decade, older homeowners’ preference to age in place and the ongoing challenge of building affordable housing will constrain new home construction.
The national mobility rate — the share of people who move each year — has fallen by almost half over the past four decades.
In areas where homeownership remains affordable, younger households contribute significantly more to local improvement spending.
The number of owners under 35 is finally rebounding, and so is their remodeling spending.
Harvard emphasizes that younger households are becoming more prominent in both buying and renovating homes, particularly in Midwest and Southern metros where ownership is more affordable than in high-cost coastal markets.
King observes that trend in her business: “It feels like 50% of our revenue is coming from people around age 35. Millennials are making money, moving in, starting families, and asking us to build additions.”
Awarded Texas Remodeler of the Year in 2015, King has worked in the renovation sector for 25 years. She recalls a shift in clientele: empty nesters once dominated kitchen and bathroom remodels, but more recently younger buyers have purchased older homes — often built between the 1920s and 1940s — and started comprehensive gut-and-rehab projects. “This was a new phenomenon,” she said.
King reports steady growth for her company — 20 to 25% annually at times — and shows no sign of slowing. “I don’t see it dropping back. We’re marketing aggressively and staying close to the phone.”
That expansion mirrors a conclusion in the Harvard report: given the difficulties in building affordable homes in many markets, remodeling will remain an important component of meeting the nation’s housing needs.
Bawden adds that rising home prices and broader cost pressures also encourage homeowners to renovate rather than relocate. Government regulations, higher material costs and a shortage of skilled tradespeople — painters, cabinetmakers and others — have driven up construction costs. “People who might once have sold are now more likely to stay, which increases demand for remodeling work,” he said.
The report also highlights disaster-related spending. Homeowner expenditures on repairs after natural disasters totaled about $30 billion, representing 6% of home improvement spending in 2016 and 2017. Bawden says Legal Eagle Contractors still work on homes damaged by Hurricane Harvey; many Houston properties remain gutted and unoccupied due to water damage.
King says Greymark handled only nine homes directly affected by hurricane flooding recently — clients or strong referrals. She explains that many flooded properties are fully paid for and owned by older homeowners who are living elsewhere while deciding whether to repair, demolish, or sell. “A lot of people are scratching their heads wondering what to do.”
Neighborhoods like Meyerland, near Bellaire and Legal Eagle’s base, remain sparsely occupied as some residents live elsewhere while they sort out recovery plans.
Energy-saving upgrades such as new roofing, windows, HVAC systems and improved insulation have been popular, though their appeal may be waning. The report notes that lower energy prices have reduced the short-term payback of such investments.
Still, with forecasts calling for stronger and more frequent storms in coming years, disaster-related repair spending could rise again, boosting the remodeling market further.
