The Great Recession and real estate market collapse will always be linked. Just as the real estate crash of a few years ago has been primarily blamed for the economic downturn that followed, the housing market now is being closely monitored for signs of a recovery that could lead to wider economic growth.
If statistics released by the National Association of Realtors (NAR) are any indication, the future of that cause-and- effect relationship remains uncertain.
Home sales statistics released by NAR in December show a housing market that is still struggling to find its legs. According to NAR, existing home sales declined for the second consecutive month in October 2013, to a seasonally adjusted 5.12 million from 5.29 million the month before. This is primarily due to a limited supply of homes and financing, indicating that sellers and lenders still have not regained confidence.
But there is some cause for optimism. While home sales fell, they remained 6 percent higher than October 2012. At $199,500, the median home price is also up 12.8 percent from the same time in 2012, representing the 11th consecutive month of double-digit, year-over-year increases in that category.
More relevant to electrical contractors, NAR has also released some statistics concerning the preferences of buyers. While the home sales market may not be strong, once buyers make a purchase, they are inclined to invest in home improvements, and many of those improvements may involve electrical work.
According to NAR’s November 2013 “Profile of Home Buyers and Sellers,” many buyers choose new homes to avoid renovations or repairs. However, new home sales make up only 16 percent of homes that are sold. When considering a home purchase, heating and cooling costs are important for the overwhelming majority of buyers (85 percent). Central air conditioning is the most important feature of a home.
In a similar survey released in March of 2013, NAR found that, within three months of a home purchase, 53 percent of buyers started a home improvement project, spending typically about $4,550. The most common improvement project is a kitchen remodel, followed by bathrooms. Of those who made these improvements, 41 percent added or replaced lighting, and 37 added or replaced appliances.
Turn to page 30 for more on this year’s construction outlook.