Remodeling stalled for now, study says

The U.S. home improvement industry is experiencing “a severe downturn,” according to a just-released report from the Harvard Joint Center for Housing Studies. Falling home prices and dwindling equity are making it harder for homeowners to finance renovation projects. The rising number of properties in, or at risk, of foreclosure is also driving down remodeling activity.

But these same foreclosures will need renovations once the housing market recovers, according to “The Remodeling Market in Transition.” States and local governments will also be looking to fix up foreclosed properties using the Housing and Economic Recovery Act of 2008, which allocated $4 billion in rehabilitation funds.

Existing rental housing and the growing number of immigrant homeowners will also help reverse the downward trend. “Years of underinvestment have left the nation’s rental stock, at an average age of 36 years, in desperate need of improvement and repair,” said Kermit Baker, director of the Remodeling Futures Program for Harvard.

Current areas of opportunity identified by the study include projects that improve a home’s energy efficiency or structural integrity.