R&R Upbeat

By Robert C. Doran Director, Marketing Research & Planning Gold Bond Building Products

llt HILE the residential repair and UU remodeling market is difficult to track, most experts believe it is significant with approximately $101 billion spent in l 989.

The mid1980s presented a period of dramatic growth for remodeling, although the market slowed in late 1986 and registered a decline in 1989 for the flrst time since the recession of 1982. However, remodeling is expected to return to its pattern of growth in late 1990 and 1991.

This expectation is based on demographic trends and economic forecasts. Surveys indicate that household heads between the ages of 35-54 tend to spend higher percentages of their incomes on remodeling.

The U.S. Census Bureau has indicated that during the 1990s, much of the growth in our population will be in the 35-54 age group as the "baby boom" population ages.

Economic factors also appear to support remodeling. As house price increases moderate and mortgage rates continue in the l0% range, there may be more incentive for homeowners to renovate their existing homes rather than trading up with hopes of making a large profit as they did in previous years.

The residential remodeling market is usually classified into three segments. (l) About 400/o of total spending is for maintenance and repairs, such as fixing a leaking roof, and many of these jobs are do-ityourself activities. (2) Major replacements such as a new furnace, new plumbing or siding, account for approximately 200/o of the total. (3) Additions and alterations, such as a new room or big kitchen or bath-

Story at a Glance

Remodeling to hit $109 billion in '91 ...3$31 age group spends the most... kitchen & bath pre jects are the favorttes.

room remodeling n'ojects, account for approximately 400/0. However, additions and alterations are usually considered discretionary as they can be easily postponed.

A number of research studies have been conducted on remodeling. Most indicate that kitchen and bathroom remodeling are the most common addition/alteration projects. Also, remodeling expenditures tend to be higher in areas with older homes.

Remodeling activity in the first quarter of 1990 reached a seasonallyadjusted annual rate of $114 billiona record high. It is estimated that remodeling activity in 1990 will total $106 billion which is about 50/o above 1989. l99l should show continual growth with repair and remodeling increasing to about $109 billion, a slightly slower rate of growth than in 1990 primarily due to a drop-off in the additions and alterations segment resulting from a projected economic slowdown in the coming, year.