During economic downturns remodeling can be the custom home builder’s best security against ebbing new construction. Remodeling tends to lag behind home building declines and to recover earlier. Although it suffered during the recession, remodeling fared better than new home building and helped many custom firms stay afloat. With the next decade expected to yield solid growth and many new opportunities for remodeling, it could remain an indispensable component of the custom builder’s tool box. A recent report by the Joint Center for Housing Studies’ (JCHS) Remodeling Futures Program at Harvard University forecasts a new remodeling era that will more closely resemble the moderate late 1990s than the past decade of highs and lows.

Home improvement spending will surge to around 12 percent through the second quarter of 2011, and then it will slow to a respectable annual growth rate of 6.5 percent in the third quarter, the JCHS predicts.

Motivations for remodeling have changed during the recession. After skyrocketing by 110 percent during the boom years, spending on upper-end discretionary projects, such as kitchen and bath remodels or room additions, dropped nearly 23 percent from 2007 through 2009. The JCHS predicts that remodeling’s growth through 2020 will be driven more by necessary improvements, upgrades, and replacements rather than upper-end discretionary projects. Much of the growth in remodeling spending through 2015 will be driven by an increase in per-household spending.

The JCHS projects a strong market for remodeling services geared to helping homeowners in the 55-plus age group to better their homes’ accessibility through aging-in-place measures. Improvements and repairs to newly sold distressed properties that have suffered from neglect or damage also will spur remodeling activity. Consumers will remain concerned about energy costs, and the JCHS predicts spending on energy efficiency upgrades and enhancements will increase. These projects saw gains from 2009 to 2010 despite overall remodeling declines.

Tell us how your business fared during the recession and what the future looks like—take the Custom Home 2011 State of Your Business Survey online: http://go.hw.net/ch-buildersurvey