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Remodeling Remains Strong

As the nation's housing industry pulls out from its worst slump since World War II, remodeling will continue to be an important adjunct to the new and existing home market, panelists at a NationalAssociation of Home Builders economic conference said recently.

Michael Sumichrast, senior staff vice president and chief economist, NAHB, predicted that residential property owners would spend $47.4 billion this year on the remodeling, maintenance, and repair of their homes. When non-residential upkeep and improvements are added, remodeling expenditures in 1983 could total $82 billion, exceeding the $63 billion expected to be spent on the construction of new homes.

As a result of the cyclical nature of the home building industry and the depth and duration of the latest housing recession, greater numbers of builders have begun to diversify their activities into the remodeling and rehabilitation area, he said. About 37s/o of the NAHB membership was involved to some extent in remodel- ing during 1982, compared to only lls/o in 1969.

Donald Spear, editor and publisher, CMR Associates, said that the resale market was the driving force behind the remodeling industry and that rqsidents who had lived in their homes six years or less were responsible for half of remodeling business. Remodeling activity had declined during the past recession in tandem with declines in existing home sales, he said.

In inflated dollars, remodeling per unit in 1983 will rise to about $650, according to Paul Rappaport, president, PNR & Associates. However, the market is leveling off and "the future doesn't look bright in terms of constant dollar expenditures. "

Robert Sheehan, staff vice president, NAHB, said that remodeling business would climb 890 in 1983 over 1982, but that in real terms, the gain would be about 290. Inflation in building materials is expected to outpace the overall gain in the CPI during 1983.

He said that a major factor determining remodeling activity would be

The Merchanl Magazlne the availability of financing. He said that S&Ls might be more predisposed in the future to offer loans for remodeling because the shorter maturities and higher yields of such loans were favorably matched to the new money that thrifts are collecting in instruments modeled after money market mutual funds.

David Sauer, president, Qualified Remodeler Publisher, Inc., said that commercial repair and remodeling would be even stronger than residential remodeling and repair during the 1980s. "If the residential market is a good one," he said, "then the commercial market is an absolute plum."

He estimated that the commercial market would total almost $59 billion in 1983. In general, he said that remodeling was "where it's at" in volume and profitability and would continue to outstrip new construction for the balance of the century.