A collapsing economy, combined with further deterioration of the housing market, continues to suppress remodeling activity, according to the Joint Center for Housing Studies of Harvard University. The Leading Indicator of Remodeling Activity (LIRA) points to homeowner improvement spending declining at an annual rate of 12.1 percent by the third quarter of 2009.
“Uncertainty in the housing market continues to stifle spending on homeowner improvements,” explains Nicolas P. Retsinas, director of the Joint Center for Housing Studies, in a Jan. 22 press release. “In light of escalating job losses, consumers are reluctant to undertake major remodeling projects.”
The market has seen steady declines since the middle of 2007, although recently the rate of decline has flattened.
“While we may be nearing the bottom of the remodeling cycle, there is little to push spending back into a growth phase until the economy recovers,” notes Kermit Baker, director of the Remodeling Futures Program at the Joint Center.
The second quarter 2008 release introduced a rebenchmarked LIRA, which was necessitated by the recent discontinuation of the U.S. Census Bureau’s Residential Improvements and Repairs Statistics, also known as the C-50 series. The LIRA now projects future trends in homeowner improvement activity, where previously it estimated trends in both owner improvements, and maintenance and repairs.
The LIRA is released quarterly by the Joint Center’s Remodeling Futures Program during the third week after each quarter’s closing. The next release date is April 16.
The LIRA measures and projects only a portion of the U.S. home improvement market, namely spending by homeowners on property improvements. Other components of the broader market — homeowner maintenance and repairs, rental improvements, and rental maintenance and repairs — are not included in the LIRA figures.
The Joint Center for Housing Studies is Harvard’s center for information and research on housing in the United States. Established in 1959, the Joint Center is a collaborative unit affiliated with the Graduate School of Design and the Kennedy School.
Contact: Joint Center for Housing Studies, Harvard University, 1033 Massachusetts Ave., Fifth Floor, Cambridge, MA 02138. Tel: 617-495-7908. www.jchs.harvard.edu
This article originally appeared in the April 2009 issue.