As evidence of weakening economic conditions, remodeling activity is not expected to rebound until 2009 according to Harvard’s Joint Center for Housing Studies . Home renovation volume boomed along with housing sales in recent years. Buyers of new homes had access to cheap money to finance renovations and existing homeowners were able to renovate as a cheaper alternative to purchasing a home.
It has been a good time to be a contractor. The decline in home equity and rising financing costs have had tempered demand for re-modeling:
“Spending on home improvements continues to be sluggish, as homeowners respond to falling home prices,” notes Nicolas P. Retsinas, director of the Joint Center for Housing Studies. “The fall-off in pending home sales suggests a long and slow recovery.”
The report result is not something unexpected, but a 4.8% annualized decline, is particularly telling of the extent of the overall economic slow down.