CAMBRIDGE, MA — The COVID-19 pandemic focused attention on the nation’s homes “as never before,” lifting the U.S. remodeling market to an unprecedented height of $567 billion in 2022, according to a new report by the Harvard Joint Center for Housing Studies.
Improving America’s Housing 2023, released by the Cambridge, MA-based Joint Center, found that despite the enormous boom in remodeling activity, the nation’s homes are older today than at any time ever recorded, and in growing need of critical replacements and maintenance. Greater investment is also needed to better prepare against disasters, improve energy efficiency and meet the accessibility needs of an aging population, the Joint Center said.
According to Harvard researchers, the widespread adoption of remote work, massive growth in home equity and savings, and the aging of the housing stock boosted annual spending on improvements and repairs to owner-occupied homes 24% between 2019 and 2021, to $406 billion, an annual growth pace that more than double the historical average of 5%. Although the overwhelming share of improvement funding came from savings, more than 1 in 5 projects costing $50,000 or more were paid for with home equity, researchers said
Despite the dramatic growth in remodeling activity during the pandemic, a meaningful share of the housing stock remains in dire need of investment, said Chris Herbert, managing director of the Joint Center.
“While many homes require critical replacements and repairs, those most in need of updates are often occupied by households least able to afford the expense,” Martin said. “Deteriorating homes threaten the health and safety of older, lower-income homeowners, while the burden of high improvement and repair costs jeopardizes the current stock of affordable housing.”
In addition, most homes lack features that make them accessible for people with limited mobility, said researchers, adding that nearly 2 million homeowners aged 55 and over pursued projects for accessibility in 2020 and 2021, “but many more will need to make these modifications as the number of older adults and multigenerational households increase in the coming decades.”
Although residential remodeling faces many headwinds in the near term – including rising interest rates, declining home sales, and labor and material supply constraints – the market is more reliant on need-to-do projects than during the boom of the mid-2000s, Martin added.
“Increasing investments that address the full range of home performance deficiencies should support longer-term growth in home improvement and repair spending, the Joint Center report noted. “Ultimately, there will always be a need to improve and repair the nation’s homes, and a demand for the industry that fills that need.”