Homeowners Stop Waiting to Spruce Up

Homeowners are beginning to spend money on improvement projects, with IHS Global Insight forecasting a jump in remodeling expenditures of 3.3 percent to $152.4 billion in 2011 and another 5.7 percent this year. National Association of Home Builders chief economist David Crowe says, “People are remodeling instead of moving.” However, rather than build an extra room, most homeowners are upgrading lighting or kitchen cabinets, expanding their gardens, or undertaking other small projects — mainly because home price depreciation has made it difficult for them to extract equity to pay for major renovations. Freddie Mac reports that cash-out refinancings totaled $5.3 billion in the third quarter, compared to $6.3 billion during the prior three-month period and a high of $83.7 billion in the second quarter of 2006. Still, even these small projects are having an impact on the economy, given that spending on home improvements outpaced spending on single-family construction by 42 percent in last year’s third quarter. | Read More