"Lower financing costs are beginning to stabilize the downturn in existing-home sales, as they also are reducing the cost of financing a home improvement project" notes Kermit Baker, director of the Remodeling Futures Program of the Joint Center. "However, they have not been enough to offset rising unemployment and falling consumer confidence and encourage homeowners to undertake major home improvement projects," cautions Baker.
M A R K E T OV E RV I E W Outlook Slow for or half of all U.S. households — can afford today’s $200,000 median-priced new home, according to figures released by the National Association of Home Builders (NAHB). Remainder of ’09 “That’s an increase of 17 million house- holds from conditions just two years ago and the best housing affordability number we have seen in years,” said NAHB Chairman Falling home prices and sagging consumer confidence take toll Joe Robson, a home builder from Tulsa, Okla. eductions in the amount spent on high- industry will recover until consumers have more Based on data from the U.S. Census R end home improvement projects contin- ue to hinder remodeling activity accord- confidence in the housing market.” “Lower financing costs are beginning to Bureau comparing home prices, mortgage rates and minimum income needed to pur- ing to Harvard’s Joint Center for Housing Studies. stabilize the downturn in existing-home sales, chase a median-priced home in February For 2009, the Leading Indicator of Remodeling as they also are reducing the cost of financing a 2007 and February 2009, a typical family Activity (LIRA) points to homeowner improve- home improvement project” notes Kermit Baker, today can purchase a house with $20,000 less ment spending declining around 12 percent. director of the Remodeling Futures Program of in household income and save nearly $500 The LIRA measures and projects only a the Joint Center. “However, they have not been per month on their principal, interest, taxes portion of the U.S. home improvement mar- enough to offset rising unemployment and fall- and insurance. The number of households ket, however. It no longer includes spending ing consumer confidence and encourage home- that can afford to purchase a home today is on maintenance and repair because the U.S. owners to undertake major home improvement 55.4 million, compared with 38.4 million Census Department stopped collecting that projects,” cautions Baker. | two years ago, according to figures compiled data for its C-50 report last year. Spending on by NAHB. rental and vacation property, likewise, is not reflected by the LIRA. “The weak housing market and the nation- Affordability al economic recession continue to take their toll Home Prices on remodeling,” explains Nicolas P. Retsinas, Home Buyers Returning director of the Joint Center for Housing Thanks to record low mortgage rates and S&P/Case-Shiller Indices Decline Studies. “It looks increasingly unlikely that this declining home prices, 55 million families — Data through January 2009, released by Standard & Poor’s for its S&P/Case-Shiller
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