Report: Remodeling spending bouncing back, but not in ABQ

Copyright 2013 Albuquerque Journal

Spending on home remodels is expected to return to pre-recession levels nationwide by mid-2014, according to an index put out by Harvard University, but indications are it wont happen in Albuquerque.

The pace of remodel spending across the country is forecast to increase by double-digit percentages from the third quarter of this year through the second quarter of 2014, when it will peak at $148.9 billion, according to the Leading Indicator of Remodeling Activity by Harvards Joint Center for Housing Studies.

The $148.9 billion in spending in mid-2014 will eclipse the most recent high of $146.2 billion set in mid-2007. The nationwide pace of remodeling is forecast to slow down in the latter half of 2014.

The soft patch that homebuilding has seen in recent months, coupled with rising financing costs, is expected to be reflected as slower growth in home improvement spending beginning around the middle of next year, said Eric S. Belsky, managing director of the center, in a prepared statement.

At the national level, remodeling activity has tended to track with the pace of home building, said Jim Folkman of the HBA, the home builders association in the metro. Both tend to reflect housing demand.

That is much less true in the Albuquerque market, however, he said. There really doesnt appear to be a one-to-one relationship between those two different construction activities in our metropolitan area.

For example, home building hit a 30-year low in the metro in 2011 when building permits were issued for 1,192 new homes, he said. In stark contrast, 2011 was a robust year for home remodels, he noted.

Permits were issued for 1,134 home alterations and additions just within the city of Albuquerque during 2011, not that far off the pace of 1,404 remodeling permits issued during 2007, the final year of the housing bubble. In 2012, as the local pace of home building picked up, remodeling activity dropped.

While the Harvard index shows remodeling activity picking up at an accelerating pace nationwide, building permits in Albuquerque show home remodels are currently running at 10 percent below the 2011 level and more than 20 percent below the 2007 level.

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Report: Remodeling spending bouncing back, but not in ABQ