Home remodeling activity continues record rise: BuildFax

by JUSTIN T. HILLEY

The BuildFax residential remodeling index reached a record high in October, extending its 23-month climb another month, as homeowners opt to stay put and remodel rather than buy a new home.

The index, which began in 2004, rose to 147.6, up 40% from 105.8 in October 2010. The index stood at 141.4 in September, which was also a high.   "The economy is returning in respect to people investing in their own housing — not in terms of dollars, but in terms of individuals in the U.S.," Joe Emison, vice president of research and development at BuildFax, told HousingWire. "What we are seeing is that people who might have bought a new house before are no longer doing so because they can't, and that energy is being channeled into remodeling."

Emison said while the number of remodeling projects is rising, the average estimated construction cost of each project is falling.   "We see that as an indication that people are doing more comfort remodels, meaning they're modeling to make their homes more comfortable as opposed to flipping it," he said.

The company found the average project cost of a major remodeling project for 2011 was $39,460, down from an index high of $43,808 in 2004. The average project cost of a minor remodeling project in 2011 was $10,968, down from an index high of $12,623 in 2006.

BuildFax's data reveals continued month-over-month gains for most regions of the country as consumers invest in remodeling in the face of growing fears of a double-dip recession and an unemployment rate that stands at 8.9%.

In October, the West (53.6 points; 52.5%), the Midwest (21.4 points; 20.2%) and the South (9.5 points; 10.6%) experienced year-over-year gains from October 2010. The West (9.6 points; 6.8%), the Midwest (7.6 points; 6.2%), the Northeast (1.2 points; 1.6%) and the South (.4 points; 0.4%) had month-over-month gains. The Northeast dropped 3.5 points (4.5%).
 
The BFRI tracks remodeling activity via building permit activity filed with local building departments across the country.