Harvard Study Shows Hope for Remodeling Sector

Cambridge, MA, Feb. 4, 2009--As the correction in housing continues, the remodeling industry is suffering right along with other sectors. Shrinking home equity is causing many people to scale back or put off home improvements, while other homeowners are struggling just to make their mortgage payments.

"Earlier this decade, the ability to borrow against equity created by rising home prices fueled remodeling activity, as well as broader consumer spending," said Nicolas P. Retsinas, director of the Harvard University's Joint Center for Housing Studies, in a news release.

"Now that prices have softened, owners cannot finance home improvement projects as easily. Even those with equity find credit harder to obtain due to tighter standards."

But remodeling's downturn won't be as severe as the one in home building, according to a report released Wednesday by the center's Remodeling Futures Program. A few reasons include a continued interested in sustainable building, especially energy efficiency, foreclosure remodeling, and aging rentals that will need upgrades

Those forced to stay in their current home due to housing market conditions might also decide to make improvements, said Amy Matthews, host of the show "Sweat Equity," on the DIY Network. "Everyone is saying 'don't move, improve,'" Matthews said. Whether by necessity or choice, people are making the homes they live in function better -- instead of upgrading to larger spaces that take more energy to run, she said.

Still, people have backed off from big kitchen and bath remodels and are sticking with the basics, said Abbe H. Will, a research assistant for the Harvard Joint Center for Housing Studies. Until the economy improves, homeowners will probably gravitate toward routine improvement and replacement jobs related to home upkeep and curb appeal, she said.