By CityTownInfo.com Staff
March 27, 2009
USA Today reports that according to a report by Harvard University's Joint Center for Housing Studies, spending on home improvement projects is expected to decline at an annual rate of 12.1 percent by the third quarter, and is not expected to improve until the economy recovers. Moreover, the Home Improvement Research Institute reported that total sales fell 4.5 percent in 2008, and is expected to fall 6.4 percent more.
Experts point out that because fewer homes are being sold, fewer remodeling jobs are being sought.
"A lot of remodeling happens after someone buys an existing home," explained Nicholas Retsinas, director of the Harvard Joint Center for Housing Studies, who was quoted in USA Today. "With the drop-off in home sales, you're seeing a drop-off in remodeling."
In addition, home equity lines of credit are harder to obtain, making it more difficult to finance projects.
"A lot of it is access to equity," noted Dan Fritschen, founder of RemodelOrMove.com. "Two years ago, there was that access. People could use equity or knew they could. But now so many are underwater. They can't get the equity line, and if they do have cash, they are more reluctant to spend it. People are feeling insecure."
Some homeowners, concerned about job security and the economy, are delaying home improvement projects. Others are scaling back projects significantly.
Connecticut's Hartford Courant reports that when it comes to remodeling, restraint is in vogue-even among those who can afford to splurge. Sharon McCormack, an interior designer, commented that clients often say, "It doesn't feel right to do that."
She cautioned, however, that too many cutbacks can be risky for people planning to sell their homes. "In updating a house, unless you're planning to live in it for 15 plus years, you need to renovate to market expectations to get a good return on your investment dollars," she noted.
Businesses related to home furnishings and remodeling are also suffering. USA Today notes that Linens 'n Things, a store selling home items, filed for bankruptcy last year, while Home Depot saw a fiscal fourth-quarter loss of $54 million.
Interior design students are feeling the downturn as well. The University of Georgia's student publication, The Red and Black, reports that many design undergrads have been unable to land internships in order to meet degree requirements. In response, the interior design program is planning to create a community-based service learning project in which students can participate.
"I think a lot of the businesses are struggling to keep their permanent workers on and trying to justify temporary workers is hard," explained Kim Hicks, a junior. "They don't have the money to pay for a paid internship or not enough work to take on an unpaid one."