The latest report from Harvard University’s Joint Center for Housing Studies puts a focus on remodeling activity where it belongs—at the local level. As important as national trends are for big-picture comparisons with new construction or even commercial activity, local information is what works best for remodelers.
The Harvard report, Metro Area Home Improvement Projections, suggests that in most places around the country, a combination of high but declining house prices as well as slowing existing-home sales means remodeling growth at a slower pace than they have enjoyed in recent years.
“Metros with cooling home prices and sales activity are not able to sustain the same pace of investment in home improvements as in recent years,” explains Chris Herbert, managing director of the Harvard Joint Center. “Our projections show especially pronounced slowing in markets such as San Antonio, Kansas City, Pittsburgh, Buffalo and Dallas.”
At the same time, there are metro areas where house prices still have room to run. Permits are up, and so is sales activity. Most of those metros are in the South and West portions of the U.S.—places such as Orlando, Florida; Las Vegas; Sacramento and San Jose, California; Denver; Seattle; and Tucson, Arizona. These cities are “paced by projected growth of 8 percent or more,” says the study’s principal author, Elizabeth La Jeunesse, a senior research analyst.
Comes With the Territory
Remodeling has always been best understood at the hyperlocal level. And at the end of the day, this new report showing slower growth in some places mixed with fast growth in others is good news. The headline is that the remodeling market is still growing. But looking at these numbers helps us also understand the larger picture. We are 10 years into “growth mode” for the United States economy as a whole. It is the longest expansion in our history. Most places have erased the double-digit market price and activity losses of the Great Recession.
Worries about the U.S. economy and remodeling are not entirely unfounded. Presently, there are ongoing trade disputes roiling certain sectors of the building products industry. (See our News items on Chinese Cabinet Manufacturing and Ceramic/Porcelain Tile.) In addition, a growing number of economists peg the U.S. as due for a slight retrenchment in GDP in one or two quarters during 2020. These types of worries come with the territory we are in—an unprecedented period of expansion.
Meanwhile, “down under” in Australia, the country is now in its 108th consecutive quarter of growth. That translates to 28 years without a recession. Reports such as the recent metro-level study from Harvard show the underlying strength of the remodeling market. After all, slower growth is still growth. We should, like Australians, ride this wave as far as it takes us. It could have a very long way to go. QR