As personal finance experts at Extreme Investor Network, we understand the importance of staying informed about trends in the housing market and how they can impact your financial decisions. Recently, reports have shown a decline in homeowners taking on remodeling projects. However, this does not necessarily indicate a slow market.
The Leading Indicator of Remodeling Activity (LIRA) peaked in the third quarter of 2022 at 17.3% and has been declining since. Similarly, the NAHB/Westlake Royal Remodeling Market Index by the National Association of Home Builders has also been on a downward trend, falling to 66 points in the first quarter of 2024.
Despite these declines, it’s crucial to note that the remodeling market is still in relatively good condition. According to NAHB Chief Economist Robert Dietz, more remodelers see the current conditions as “good” rather than “poor.”
Factors such as Covid-19 lockdowns and inflation have influenced remodeling activity. During the height of the pandemic, there was a surge in home renovation projects as homeowners sought to improve the spaces they were spending more time in. Additionally, savings accumulated during the lockdowns were redirected towards home improvements.
As Covid-era savings have diminished, homeowners are now undertaking fewer but more costly remodels. The average expenditure on home improvements in 2023 increased by 12% compared to the previous year, while the number of projects decreased.
Looking ahead, experts predict that home improvement activity will continue to moderate from its peak during the pandemic. However, remodelers remain busy as owners are staying in their homes longer due to aging housing stock in the U.S. Aging-in-place remodeling has become a significant sector within the market as baby boomers choose to invest in their current homes rather than relocate.
At Extreme Investor Network, we recognize the importance of being proactive about managing your finances in light of changing market conditions. Stay tuned to our website for more insights and tips on how to navigate the evolving landscape of personal finance.