According to the housing forecasts from the National Association of REALTORS® (NAR), the Mortgage Bankers’ Association (MBA), plus Freddie Mac and Fannie Mae, existing home sales are estimated to rise in 2017. This means remodeling projects — which hopefully will involve lighting — will continue to be strong in the months ahead.
Strong gains in home renovation and repair spending are expected to continue into 2017 before tapering, according to the Leading Indicator of Remodeling Activity (LIRA) released in late October by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects that annual growth in home improvement and repair expenditures will continue to increase, surpassing eight percent by the second quarter of 2017 before moderating later in the year.
“Homeowner remodeling activity continues to be encouraged by rising home values and tightening for-sale inventories in many markets across the country,” says Chris Herbert, Managing Director of the Joint Center. “Yet, a recent slowdown in the expansion of single family homebuilding and existing home sales could pull remodeling growth off its peak by the second half of 2017.”
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According to the National Association of Home Builders (NAHB), Boomers are more active than their parents were and will continue to influence the housing market albeit in a different way than when they were growing their families.[/mks_pullquote]
“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. “At $327 billion annually, the homeowner improvement and repair market will surpass its previous inflation-adjusted peak from 2006.”
The NAR is predicting home sales (excluding new construction) to reach 6 million in 2017 (an increase from the 5.8 million estimated for this past year) while Fannie Mae and Freddie Mac are anticipating 6.2 million. The MBA is the most optimistic with its prediction of 6.5 million home sales in the coming year.
Meanwhile, new home construction starts are projected to rise approximately 1.5 million per year through 2024, according to an estimate released by Forisk Research.
One of the most significant factors affecting homebuying is the beginning of Baby Boomers reaching retirement age and the start of Millennials entering the workforce. The 76 million Baby Boomers who were so highly influential on the U.S. economy for years as the largest generation in America are now surpassed by the Millennial generation. However, these two groups’ buying habits couldn’t be further apart.
According to the National Association of Home Builders (NAHB), Boomers are more active than their parents were and will continue to influence the housing market albeit in a different way than when they were growing their families. They have a more sophisticated style and want options and choices in their homes. Some are selling their homes and moving to luxurious age-restricted communities while others are redesigning their homes with the idea of aging in place.
Builders who cater to this market segment are aware of these needs and are incorporating first floor bedrooms and bathrooms, wider hallways and doorways, and better lighting choices to meet the needs of seniors by adding more lighting fixtures in areas such as under cabinets and in staircases as well as multiple switches for easier access from multiple points in a room.
The housing stats for Millennials, however, is daunting. Homeownership rates for Americans under age 35 is relatively half the national number, coming in at 34.1 percent of the market. Surprisingly it’s not a matter of Millennials choosing to rent rather than own. According to an article in the The Chicago Tribune last month, one-third of people age 18 to 34 are living with their parents. Furthermore, the article cited a report from the Pew Research Center that noted young adults have replaced the elderly as the age group most likely to live in multigenerational households.
The reason Millennials are not buying homes is varied. Some blame the rising cost of renting/owning, others point to staggering student loan debt and lower starting salaries than in years past. That said, members of the Millennial generation will still be furnishing their living areas with quality products, wherever they are living in an apartment, a home, or mom’s basement.
Recognizing these shifts going on in the homebuying market will be important to lighting showroom staff as their consumer demographic changes.