Jul 18 2008 8:36AM | Permalink | Email this | Comments (0) |
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The latest Leading Indicator for Remodeling Activity isn't good news for remodelers. The LIRA, released by Harvard's Joint Center for Housing Studies late yesterday, shows a 5.6 percent decline in remodeling activity in the year ending in second quarter 2008 from a year ago, which follows a 6.1 percent decline in the first quarter. 

The Joint Center is also predicting accelerating declines going forward -- 7.1 percent in the third quarter, 9.2 percent in the fourth quarter and 11.1 percent in the first quarter of 2009. The $122 billion rate predicted for the year ending in 2009-1 represents a more than 17 percent decline in the market since the 2007-2 peak.

The factors driving this are no surprise -- a weak economy, declining home values and lousy home sales.

It's worth noting that the LIRA only tracks improvements to owner-occupied homes, not maintenance and repairs or any work done to rental properties. Those two areas are the (comparatively) stronger parts of the market, so the LIRA may be slightly overestimating the decline. But homeowner improvements are the most lucrative part of the market, so that backs up what I've been hearing anecdotally, that projects are a lot smaller this year.

For more on what Harvard and others are predicting for the 2009 market and beyond, be sure to check out our August issue.