Current Remodeling Market Report from NAHB
Based on 2018’s remodeling statistics, the remodeling market looks to remain steady going into 2019. The National Association of Home Builders (NAHB) reports a remodeling market index of 58 for the third quarter of 2018. (Any number above 50 indicates a higher number of remodels than the previous quarter.) Each quarter’s index numbers have steadily risen/been above 50 ever since the second quarter of 2013.
As of October 18, 2018, the NAHB reported that market conditions rose one point from the previous quarter to 58. More specifically, major additions and alterations rose one point, minor additions and alterations decreased one point, and home maintenance and repair rose one point. Overall, these steadily increasing numbers indicate increasing consumer confidence in the remodeling industry as a whole.
2019 LIRA Report Projections
Going into 2019, the Leading Indicator of Remodeling Activity (LIRA) predicts that home remodeling and repair expenditures will soften slightly from the decade-high 7.7% to a still steady 6.6% through 2019’s third quarter. This decrease is largely due to a slower pace of home sales since many remodels occur immediately before and after home sales.
That said, Abbe Will, Associate Project Director of the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, states that “annual expenditures for residential improvements and repairs is still expected to grow to over $350 billion nationally” through 2019’s third quarter. So even though a slightly slower national housing market is softening remodeling numbers, consumer confidence in the remodeling industry hasn’t suffered, and the industry as a whole remains strong.
LIRA’s 2019 projections and Abbe Will’s estimations align well with a recent Zillow report that all across the U.S., most homeowners would prefer to stay in their current homes than move. Zillow reports that 76% of Americans would rather invest their funds in remodeling and repairing their current homes rather than investing funds in a down payment for a new home. So while there may be fewer remodeling projects geared toward resale/redesigning homes after purchase, homeowners are still remodeling their residences to adapt them to their needs, and this is particularly true of older and retiring Americans.
Chicago Home Values
With these national averages in mind, let’s take a look at home values in Chicago. According to Zillow, Chicago home values rose by 3.2% over the past year and are predicted to rise 6% over the following year. The median home value in Chicago is $228,500, and the median list price is $246 per square foot.
Advantages of Remodeling
The reports from NAHB, LIRA, and Zillow indicate a healthy remodeling industry going into 2019, but even without these favorable market indications, there are some advantages to remodeling that never change: remodeling is always less expensive than starting over with a new home. If your current neighborhood and home meet most of your needs, it’s usually fiscally smart to remodel to meet your wants.
For highly specialized remodeling designs, you’ll want to ensure that you’re investing in your forever home, but for general updates and home improvements, you’ll always be making a smart economic investment by raising your home’s value incrementally in a manner that accommodates your available resources and time while raising your general standard of living satisfaction.