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Homeowner remodeling spending should moderate across the majority of the nation’s largest metropolitan areas as home price appreciation cools, according to the Joint Center for Housing Studies of Harvard University’s Remodeling Futures Program.
Though home improvement spending likely won’t decline in these areas, annual growth in improvement expenses is expected to fall to its lowest rate in nearly three years in almost half of the cities.
“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,” Chris Herbert, managing director of the Joint Center for Housing Studies, said in a press release. “Our projections show especially pronounced slowing in markets such as San Antonio, Kansas City, Pittsburgh, Buffalo and Dallas.”
Cooling home price appreciation could be affecting remodeling spending for various reasons, including the possibility of less equity to lend against or a decline in the incentive to prepare a home for sale.
The slower pace in remodeling has mixed implications for home sales. It could mean more homeowners are neglecting repairs because they plan to sell “as is,” or it could mean a growing number of people have decided to age in place and aren’t fixing their homes up to sell.
Although remodeling is moderating in many areas, it should remain relatively strong in certain cities.
“Despite the broader deceleration, remodeling gains should remain strong and even accelerate through year-end in some areas of the country including Orlando and Las Vegas where remodeling permitting, house prices and homebuilding have picked up,” said Elizabeth La Jeunesse, senior research analyst in the center’s Remodeling Futures Program.
“Regionally, the strongest growth in 2019 is expected to be among metros in the West, paced by projected growth of 8% or more in Sacramento, Denver, Seattle, Tucson, San Jose and Las Vegas,” she said.