Upload
others
View
0
Download
0
Embed Size (px)
Citation preview
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
www.jchs.harvard.edu
Remodeling Market Trends and Update
Kermit Baker
Remodeling Futures Conference April 13, 2010
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
www.jchs.harvard.edu
Remodeling Market Issues
1. Falling levels of home equity are slowing industry recovery.
2. Households with limited home equity and low mortgage rates creating a “lock-in” effect that will slow mobility for years to come.
3. Lead paint rule presents tricky implementation problems; Homestar program likely to provide minor boost for energy efficiency projects.
4. Stronger sectors remain: older households; cash financed projects; pro installations.
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Owners’ Equity in Their Home Has Declined by Over Half Since 2006 High
$0
$5
$10
$15
2005-1 3 2006-1 3 2007-1 3 2008-1 3 2009-1 3
Owner’s equity in real estate (trillions of $)
Source: Federal Reserve Board Flow of Funds Accounts.
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
As a Result, Home Equity Loans are Off Almost 10% Over Past two Years
600
800
1,000
1,200
2005-1 3 2006-1 3 2007-1 3 2008-1 3 2009-1 3
Home equity loans (billions of $)
Notes: Includes loans made under home equity lines of credit and home equity loans secured by junior liens. Source: Federal Reserve Board Flow of Funds Accounts.
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Almost a Quarter of All Mortgaged Homes are “Under Water”, With Many More at Risk
Number of mortgaged homes nationally , Q4 2009
* Near negative equity defined as properties within 5% of being in a negative equity position.Source: First American CoreLogic.
2.3 mill.
11.3 mill.
47.6 mill.
2008
4.9%Near negative equity mortgages*
23.8%Negative equity mortgages
100% All mortgaged homes
share
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Top and Bottom 10 Metro Areas for Negative Equity Share, Q4 2009
Note: Sample includes top 50 Census Bureau Statistical Areas (Metropolitan Statistical Areas and Metropolitan Divisions) by number of active mortgages that have markets with 50,000 or more loans.Source: First American CoreLogic.
Areas with High Share of Loans Underwater Heavily Concentrated in Overbuilt Markets
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
The Recent Sharp Decline in Mobility Pre-Dates the Recession
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Steepest Declines in Net Domestic Migration Centered in Fast-Growing Sunbelt Cities
Difference in net domestic migration, 2009 vs. 2006 (000s)
*Hurricane Katrina caused a large movement of people from New Orleans to nearby areas such as Baton Rouge.Notes: Sample includes top 50 largest populated metropolitan statistical areas as estimated in 2009. Change in net domestic migration from 2006 to 2009. Source: U.S. Census Bureau.
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Given High Level of Originations Recently, Mortgage Rates for Most Owners at 6% or Less
36.7%
29.9%
15.3%
19.5%
23.2%
5.0%
6.0%6.3%6.4%
5.9%
0%
10%
20%
30%
40%
2005 2006 2007 2008 20090%
5%
10%Mortgage originations as share of total outstanding
Interest rate, conventional 30-yr mortgages
Notes: Mortgages Originations Share may be overstated due to double counting (i.e. multiple refinancings). Source: Freddie Mac, Federal Reserve Board, Haver Analytics.
Originations as share of all loans by year; average mortgage rate for year
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
On the Eve of Implementation, Many Remodelers Unfamiliar with Lead Paint Regs.
Very familiar, 25%
Somewhat familiar, 51%
Not at all familiar, 24%
Familiarity with EPA’s lead paint renovation, repair, and painting rule, % of remodelers
Source: JCHS National Green Remodeling Survey, March 2010.
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
While Most Plan to Undertake Projs. Requiring Lead Paint Certif., Few Plan to Specialize
Specialize, 2%
Undertake as arise, 55%
Avoid, 29%
Don't know / N.A., 14%
Firm’s plan to target projects requiring lead paint certification, % of firms
Source: JCHS National Green Remodeling Survey, March 2010.
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Energy Efficiency Rebate Program Expected to Have Modest Impact on Spending
No change, 13.0%
Small increase (<10%), 36.0%
Mod. increase (10%-25%),
38.0%
Sign. increase (>25%), 13.0%
Estimated change in homeowner spending, % of remodelers
Source: JCHS National Green Remodeling Survey, March 2010.
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Homestar Energy Efficiency Retrofit Program
Goal: Lowering national energy consumption and creating jobs by increasing demand for energy efficient products thru provision of rebates to homeowners.
Procedure: point-of-sale rebates from dealers, retailers, contractors, and utilities.
Products covered: insulation, duct sealing, water heaters, HVAC units, windows, doors.
Funding – around $6 billion for fiscal years 2010-2011, with around $3 billion for product rebates.
Status – similar House and Senate bills filed with bipartisan support.
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Homestar Rebates Could Total About 10% of Market in Covered Categories
Market spending, estimated program rebates
* Estimated from experience in Minnesota’s Project Re-energize.Source: Joint Center Estimates from Congressional proposals and 2007 American Housing Survey.
Estimated Home Star rebate allocation
(billions of $)Annual market spending
(billions of $, 2007)Project category
$1.3$12.9Windows/doors
$30.6
$2.2
$13.2
$2.4
$3.1 (10% of market spending)Total
$0.2Sealing*
$1.3HVAC
$0.2Insulation
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Estimated Remodeling Spending Market Has Fallen Almost 20% From 2007 High
108 121 136162 172
231274
22841
4044
4857
49
52
43
149161
180
210229
280
326
272
$0
$50
$100
$150
$200
$250
$300
$350
1995 1997 1999 2001 2003 2005 2007 2009(e)
Owner-occ. homes Rental units
Billions of dollars
Sources: JCHS tabulations of the 1995-2007 American Housing Surveys (AHS) and the US Department of Commerce Survey of Expenditures for Residential Improvement and Repairs (C-50 reports). 2009 estimate base on JCHS LIRA.
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Tracking Recent Home Improvement Trends: NPD/HIRI Monthly Consumer Sentiment Index
National monthly survey of about 13,000 households (9,000 homeowners) on home improvement plans, with data released early the following month;
Number of planned projects, estimated cost, DIY/pro installation, and expected financing information collected;
Over 150 home improvement, maintenance and repair, and lawn and garden categories covered each month in survey;
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Homeowners Planning on Increasing Spending on Home Improvement Projects
Note: Monthly figures are 3-month moving averages centered on reported month and normalized per 100,000 responses; February estimate based on January and February data only.Source: JCHS tabulations of the Home Improvement Research Institute’s monthly Consumer Sentiment Tracking Study, Feb. 2008-Mar. 2010.
Three month moving averages compared to year-ago level for planned level of spending by owners
-11.8%
-8.4%-10.0% -9.3%
-11.7%
-15.6%-17.5%
7.2%
-6.2%
8.9%
4.3%
-11.7%
-2.4%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Mar'09 Apr May Jun Jul Aug Sep Oct Nov Dec Jan'10 Feb Mar(e)
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Planned Spending by Older Owners Exceeds That of Their Younger Counterparts
Three month moving averages compared to year-ago level for spending by owners for planned home improvement projects by age of respondent
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Mar'09 Apr May Jun Jul Aug Sep Oct Nov Dec Jan'10 Feb Mar(e)
Under 45
65+
All
Note: Monthly figures are 3-month moving averages centered on reported month and normalized per 100,000 responses; February estimate based on January and February data only.Source: JCHS tabulations of the Home Improvement Research Institute’s monthly Consumer Sentiment Tracking Study, Feb. 2008-Mar. 2010.
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Three month moving averages compared to year-ago level for spending by owners for planned home improvement projects by project type
Planned Kitchen, Bath and Room Addition Projects Have Begun to Recover in Recent Months
-30%
-20%
-10%
0%
10%
20%
Mar'09 Apr May Jun Jul Aug Sep Oct Nov Dec Jan'10 Feb Mar(e)
Kitchen, Bath, Room Additions & AlterationsExterior ReplacementsAll Projects
Note: Monthly figures are 3-month moving averages centered on reported month and normalized per 100,000 responses; February estimate based on January and February data only.Source: JCHS tabulations of the Home Improvement Research Institute’s monthly Consumer Sentiment Tracking Study, Feb. 2008-Mar. 2010.
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Planned Spending on Professional Projects Generally Outpacing Do-It-Yourself Activity
Three month moving averages compared to year-ago level for spending by owners for planned home improvement projects
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Mar
'09
Apr
May Ju
n Jul
Aug Sep
Oct
Nov Dec
Jan'
10 Feb
Mar
(e)
ProDIYTotal Pro & DIY
Note: Monthly figures are 3-month moving averages centered on reported month and normalized per 100,000 responses; February estimate based on January and February data only.Source: JCHS tabulations of the Home Improvement Research Institute’s monthly Consumer Sentiment Tracking Study, Feb. 2008-Mar. 2010.
JOINT CENTER FOR HOUSING STUDIESGraduate School of Design | Harvard Kennedy School
Harvard University
Copyright 2010
Leading Indicator of Remodeling Activity Points to Healthy Recovery as Year Progresses
Source: Joint Center for Housing Studies.
Homeowner ImprovementsFour-Quarter Moving TotalsBillions of $
Four-Quarter MovingRate of Change
$145.8 $146.2$144.2
$139.1
$133.0
$125.7
$121.0 $120.1$118.2 $118.1
$114.5
$106.5
$111.0
$121.5
$110.3
$115.8
6.8%3.1%
-0.1%-4.0%
-8.8%
-14.0%-16.1%
-13.6%
4.9%
-3.1%
-9.7%-6.7%-3.6%-5.4%
-6.1%
-11.1%
$100
$105
$110
$115
$120
$125
$130
$135
$140
$145
$150
2007-1
2 3 4 2008-1
2 3 4 2009-1
2 3 4 2010-1
2 3 4-30%
-20%
-10%
0%
10%
20%
30%
40%
US Census Bureau LIRA