Although New Home Construction Remains Far Below its Pre-Crisis Level, Remodeling of Existing Homes – a Strong Indicator of Consumer Confidence – has Fully Recovered and has Nationally Surpassed Its Pre-Crisis Level
San Francisco, – August 11, 2015 – (RealEstateRama) — BuildZoom, the intelligent marketplace for remodeling and construction services, launched today The BuildZoom & Urban Economics Lab Index, a new set of residential construction and remodeling indices. The Index shows that in contrast to the tepid recovery of new home construction, the remodeling of existing homes has surpassed its pre-crisis level.
The Index was developed jointly with Professor Albert Saiz of the MIT Center for Real Estate, leveraging BuildZoom’s growing repository of over 80 million building permit records. The current release includes national figures, as well as an initial selection of metropolitan areas that includes the Chicago, Dallas, Phoenix, San Francisco and San Jose metro areas.
Estimated at about $300 billion a year, the residential remodeling market is roughly comparable in size to the $340 billion value of residential construction put in place in 2014. “Despite its size, and even though it is a good indicator of consumer confidence, residential remodeling is generally overlooked,” said Issi Romem, Chief Economist of BuildZoom. “The existing focus on new construction imposes a view of the economy that overemphasizes conditions in high-growth metro areas, and in particular on their fringe, where new home construction is concentrated. Remodeling provides a more evenly-distributed view of the economy, that is more likely to represent conditions in the nation as a whole.”
While new home construction is recovering only gradually and remains 60.7% below its 2005, pre-crisis level, remodeling of existing homes has fully recovered from the housing bust, and is in fact 3.4% above its 2005 level. As demonstrated in the first quarterly report, the specifics vary substantially across metro areas. A full account of the Index, including the metro area findings and links to supporting material, is available online at https://www.buildzoom.com/blog/index2015q1.
The BuildZoom & Urban Economics Lab Index is not the only U.S. remodeling index available, but it is the first publicly available index that covers individual metro areas, and it is the only such index which is transparent with respect to the data and methods used.
“Neither the data nor the methods are perfect, but we and our partners at the MIT Center for Real Estate are firmly committed to transparency, and we openly invite users to inspect them and alert us to any issues that arise,” said Romem. “We believe that the BuildZoom & Urban Economics Lab Index provides a valuable new source of information that sheds light on the housing market, and on the economy at large.”
“The Index is part of our broader mission, to bring a new level of transparency to the industry,” said BuildZoom Co-founder Jiyan Wei. “We’re excited to be collaborating with Professor Saiz of the MIT Center for Real Estate, and we are looking forward to expanding the scope of the Index moving forward.”
BuildZoom is the intelligent marketplace for remodeling and construction services. The company simplifies the process of selecting a home improvement contractor and improving the outcomes of remodeling and construction projects. By gathering and analyzing information on 3.5 million licensed contractors and 80 million improvement projects, the company has brought new levels of transparency and accountability to a notoriously difficult industry.
About the MIT Center for Real Estate
The MIT Center for Real Estate is uniquely positioned to help the industry increase its efficiency, prosperity, and social responsibility. Through research and education initiatives at the MIT Center for Real Estate, MIT applies its tradition of excellence in technology, knowledge transfer, and global reach to the real estate industry, developing innovations to help practitioners build responsibly and profitably.
Our goal is to educate the next generations of industry leaders, preparing them with tools to develop better real estate worldwide. In keeping with the MIT tradition, we bring to industry the very best offered by practical experience coupled with the interdisciplinary studies of design, science, and engineering.
Issi Romem, Chief Economist,