Homeowners will spend more than ever on home improvements, repairs
The growth in home renovations and repairs is expected to continue unabated into next year, according to a new report released by the Joint Center for Housing Studies of Harvard University.
Some borrowers may be taking advantage of growing equity in their homes to finally finance their dream remodeling projects. Spending for home renovations will also continue to grow, reaching a record $327 billion according to the Leading Indicator of Remodeling Activity (LIRA).
The LIRA, which gauges the health of the home improvement and repair markets in the U.S., predicted last July that the anticipated growth in improvement and repair spending would reach 8 percent at the start of 2017.
But by mid-2017, though, growth is expected to taper due to a slowdown in the expansion of single-family homebuilding and existing home sales.
“Homeowner remodeling activity continues to be encouraged by rising home values and tightening for-sale inventories in many markets across the country,” Chris Herbert, managing director of the Joint Center, says in a statement.
“Even as remodeling growth trends back down, levels of spending are expected to reach new highs by the third quarter of next year,” says Abbe Will, research analyst in the Remodeling Futures Program at the Joint Center, in a statement.
Cash-out lending recorded its ninth consecutive quarterly increase by both loan count and sum-of-equity draw in the second quarter of 2016, according to Black Knight Financial Service’s Mortgage Monitor.
“Today’s cash-out refinance borrowers continue to present a relatively low risk profile, historically speaking,” says Black Knight Data & Analytics Executive Vice President Ben Graboske.
The average credit score among Q2 2016 cash-out refinance borrowers (748) is 67 points higher than that of the low point recorded in Q3 2006, Graboske says. It’s also nearly 60 points higher than the average credit score among cash-out refinance borrowers from 2005 to 2007, he says.