Emerging geography of home improvement activity
Tuesday, April 13, 2021 from Floor Covering Weekly
Given the hot housing market and generally low levels of inventory on the market, house prices have continued their upward trend. Nationally, house prices rose 10 percent over the past year, far outstripping income gains for most households. For households that have been able to make the move into homeownership in higher price markets, there has been little left over for home improvements, at least in the early years after purchase.
The pandemic has altered the calculus of locational choices. When regularly commuting to work, there are strong incentives to live within a relatively easy commute of the workplace. When commuting less frequently, there are a wider range of locations to choose from, and if working remotely full time, a worker can live almost anywhere.
Given the large share of workers who have been working remotely during the pandemic, many have taken advantage of this flexibility to choose a more preferable place to live. Moving closer to family, looking for new job opportunities and pandemic-related safety concerns with their current residence all are reasons behind the growing mobility. The most common motivation for moving in 2020 was financial reasons, such as the desire for more affordable housing options, according to the Pew Research Center. Other analysis by the National Association of Realtors confirms this trend, finding that many recent moves have been out of high-cost urban areas into more affordable suburban, exurban and rural communities.
Last year, for example, major metro areas with the highest share of owners under age 35 — a list that includes Omaha, Oklahoma City, Nashville, Grand Rapids, Denver, Indianapolis and Tulsa — as a group saw remodeling activity grow. Those with the lowest share — Los Angeles, Miami, San Francisco, New York, Honolulu, San Diego, San Jose and Tampa — as a group saw activity decline.
Homeownership affordability is fundamental to the health of the remodeling market because younger households are traditionally the most active group for home improvement projects. Households under age 35 often begin with DIY efforts and then increase their spending as they turn to professionally installed projects as both their incomes and families grow. More affordable areas have allowed younger households the ability to purchase a home earlier in their lives and begin making changes. When households delay homeownership, they often skip over modifying their homes. As households continue to be less constrained by their place of employment in choosing where to live, more will opt for locations with greater natural beauty, a better climate and for homes that have more space and features that support their needs.
Kermit Baker is the senior research fellow for the Joint Center of Housing Studies at Harvard University. He may be reached via e-mail at [email protected]