The home improvement, maintenance, and repair industry.

Spending on existing housing is important not only for the building

materials, building products, and construction markets but also for the

macroeconomy. It accounts for about half of total spending on housing

capital. The new construction, home improvement, maintenance, and repair

markets use overlapping distribution channels, labor, and capital

inputs. The various segments of the housing industry touch many other

industries and exhibit different patterns over the course of the

business cycle. Understanding the unique characteristics of these

segments helps business economists and macroeconomists in planning and

interpreting changes in the economy as well as estimating better

forecasting models. Business Economics (2015) 50, 101-108. doi:

10.1057/be.2015.7

Keywords: home improvement, maintenance, repair, housing,

construction

**********

Investment in housing capital is widely followed as an indicator of

economic health. Housing starts, permits issued, and value of

residential construction put-in-place are reported monthly by the Census

Bureau. As soon as the numbers are published, they are scrutinized by

economists and industry analysts for clues to changes in the

marketplace. Not only do they signal changes in the housing market and

GDP, they also reflect household confidence.

For economists interested in home improvement, the Bureau of

Economic Analysis (BEA) provides estimates of investment in existing
construction as part of the National Income and Product Accounts (NIPA).

The NIPA also report housing maintenance and repairs expenditures.

Although home improvement, maintenance, and repair receive less

attention in the media than housing starts, the total amount of spending

on these three activities rivals that of new residential construction.

1. What are Home Improvement, Maintenance, and Repair?

Although maintenance and repairs use nearly the same inputs as home

improvement activities, they have different effects on the housing

stock. Understanding the distinction between them is important for

several reasons. First, improvement is an investment that impacts the

value of housing capital and therefore can affect the value of

homeowners' equity. Maintenance, on the other hand, is an expense

that preserves capital and does not lead to a wealth effect. Second, the

two are difficult to distinguish empirically, which creates challenges

in measurement for economists in the industry. Third, forecasters need

to take into account the fact that these categories of spending each

have their own unique drivers.

Home improvement

Home improvement (sometimes referred to as remodeling or

renovation) is an investment activity made to the existing housing stock

that adds to value or useful life. (1) The BEA defines home improvement

as follows:

Improvements to residential structures ... consist of additions,

alterations, and major replacements to structures subsequent to their

completion. They include construction of additional housing units in

existing residential structures, finishing of basements and attics,
remodeling of kitchens and bathrooms, and the addition of swimming pools

and garages. They include major replacements--such as new roofs, water

heaters, furnaces, and central air conditioners--that prolong the

expected life of the structure or add to its value; routine maintenance

and repair work is not included. [Bureau of Economic Analysis 2014]

The Census Bureau estimates that home improvement spending on

private, owner-occupied dwellings was $133.1 billion in 2013 [Census

Bureau 2014c]. According to the American Housing Survey (AHS) 50 percent

of homeowners made improvements in 2011-12. Of these, 36 percent were

do-it-yourself projects, and 64 percent were done by professionals

[Census Bureau 2013]. Owners choose a wide range of different projects

reflecting a diversity of trades and materials. Table 1 ranks projects

by major category from the AHS survey. Historically, bathroom and

kitchen remodeling have been the two most frequent types of home

improvement.

Maintenance and repair

Housing capital depreciates; that is, it undergoes obsolescence and

normal wear-and-tear. Maintenance is preventative care that conserves

existing capital at its present functioning condition whereas repair

restores the capital to a previous operating condition. The Census

Bureau offers a succinct description of these activities:

Expenditures represent current costs for incidental maintenance and

repairs that keep a property in ordinary working condition, rather than

additional investment in the property. Maintenance includes expenses for

painting, papering, floor sanding, furnace cleaning or adjustment, etc.

Repairs include many kinds of expenditures for plumbing, heating,
electrical work, and other kinds of activity involved in the upkeep of

residential properties. Repairs also include replacements of parts while

replacement of entire units are classified as alterations to housing

structures. [Census Bureau 2006]

The Census Bureau also provides illustrations to help distinguish

among spending categories:

For example, roof repairs (including replacement of shingles,

gutters, etc.) are classified under maintenance and repairs, but a

complete reroofing is classified as an alteration to housing structures.

Plumbing repairs may include extensive replacement of water pipes, but

if the entire piping system is removed and a new one put in, the

expenditures for the work are classified as an alteration to housing

structures. Maintenance and repairs do not include expenses for trash

and snow removal, lawn maintenance and landscaping, or cleaning and

janitorial services. [Census Bureau 2006]

The NIPA treats maintenance and repairs as an expense rather than

an investment. These outlays are reported as a component in computing

net value added in the housing sector. The BEA also includes property

insurance, brokers' commissions on land, closing costs, and

property management fees as housing expenses in its NIPA value-added

figures.

Although the markets for new construction, home improvement,

maintenance, and repair have their unique characteristics, the

boundaries between them can be porous. This is especially the case in

the upstream links of the supply chain. To take an example, wallboard

can be installed in a new home (new construction), used to finish a
basement or attic (improvement), or applied to a small water-damaged

section of a wall (repair). There is substitutability of labor even at

the installation stage. For example, during the housing downturn new

home builders serviced the home improvement market to supplement their

revenue. Furthermore, if the cost of repair is high enough it can result

in a renovation [Joint Center 2013].

Another commonality is that similar regulations and costs of

compliance apply to contractors across the markets. It is common for

local governments to require permits, even for major renovations, and an

inspection to ensure compliance with building codes. In addition, many

local and state governments have requirements for licensing and

registration. Contractors must also meet federal standards such as those

set by the Occupational Health and Safety Administration and the

Environmental Protection Agency.

2. Industry Structure

Home improvement, maintenance, and repair encompass a diversity of

products and activities and are highly integrated with many other

sectors of the economy. Consequently, each link in the supply chain has

its own individual market structure. The National Association of Home

Builders recently quantified the impact of home improvement on other

industries. In particular it accounted for jobs created in

manufacturing, distribution, and professional services. The research

concluded that every $100,000 spending on home improvement creates 0.89

jobs and $83,402 in additional wages and profit across all industries

[Emrath 2014a].

Manufacturing
Both building materials and building products manufacturing feed

into the industry's supply chain. Building materials are the

elements that make up the structure of a building and supporting

fixtures, such as lumber, concrete, doors, and windows. Building

products include mostly modular items which are not critical to

structural integrity. Examples of building products are hardware,

architectural ornaments, HVAC (heating, ventilation, air conditioning)

systems, and flooring. A few of the more widely known companies in this

segment of the industry are USG (wallboard), Certain Teed (roofing),

Moen (plumbing), and Fastenal (fasteners).

Distribution

Many manufacturers use a mix of channels to supply wholesalers,

contractors, and retailers. These same distributors often support the

new construction, home improvement, maintenance, and repair markets.

Some, such as Masco, are vertically integrated and distribute as well as

install their own products. The Census Bureau tracks two categories of

distribution wholesalers: Lumber and Other Construction Materials

Merchant Wholesalers (NAICS 4233) and Hardware, and Plumbing and Heating

Equipment and Supplies Merchant Wholesalers (NAICS 4237). In 2012, the

Census Bureau reported 16,747 construction materials wholesaler

establishments employing 188,918 workers with an annual payroll of $9.9

billion. For the same time period the corresponding numbers for hardware

wholesalers were 19,523 establishments, 224,517 employees, and a payroll

of $13.2 billion [Census Bureau 2014a], Huttig Building Products and

BlueLinx Holdings are among the largest distributors in the market.

On the retail side, there are many stores that carry home
improvement, maintenance, and repair products. Although hardware stores,

garden centers, plumbing and electrical supply companies, department

stores, and farming supply stores all participate in the market, the

dominant competitors in retail distribution are Home Depot, Lowe's,

Menard, and True Value. In 2012 there were 78,314 Building Material and

Garden Equipment and Supplies Dealers (NAICS 444) establishments with

1,170,402 employees and an annual payroll of $35.2 billion [Census

Bureau 2014a],

The distribution channels tend to be concentrated. In 2007, the

latest year concentration data are available from the Economic Census,

fewer than 15 percent of building materials and supplies dealers had

revenues of less than $250,000 in 2007; and over 57 percent of industry

receipts went to the top 50 building materials and supplies dealers

[Census Bureau 2009].

Installation

Home improvement can be done either as a homeowner do-it-yourself

(DYI) project or a contractor do-it-for-me (DIFM) project. Unlike the

distribution channels, the home improvement contracting industry is

highly fragmented. The 2007 Economic Census of the Construction Industry

indicates that at the height of the residential boom there were over

650,000 contractors engaged in home improvement. Most of these

establishments were small, with 70 percent earning less than $500,000

and 50 percent less than $250,000. The top 50 general home improvement

companies accounted for less than 8 percent of total industry revenue,

indicating that the home installation market is not concentrated [Census

Bureau 2009], This segment of the industry is likely to remain highly
competitive. Homeowners undertake a wide range of small home improvement

and maintenance projects. This diversity encourages remodelers to remain

small and specialized [Joint Center 2013].

[FIGURE 1 OMITTED]

Professionals working in home improvement are often either

full-time remodelers (NAICS 236118) or specialty trade contractors

(NAICS 238) who accept new construction jobs as well as home additions

and alterations. Remodelers may also take on maintenance and repair

work. The primary subgroupings within specialty trades are Foundation,

Structure, and Building Exterior Contractors (NAICS 2381); Building

Equipment Contractors (NAICS 2382); and Building Finishing Contractors

(NAICS 2383). Many of these firms did not survive the Great Recession.

At the height of the boom in 2007, the Census Bureau counted 99,791

residential home improvement establishments and 515,169 specialty trade

establishments. By 2012, corresponding numbers fell to 89,045 and

421,717, respectively [Census Bureau 2014a].

3. Tracking the Industry

The BEA estimates that in 2012 home improvement spending was $166

billion, and maintenance and repair spending was $206 billion. Together

the two accounted for 2.3 percent of GDP. In contrast, investment in new

construction was $329 billion or 2.0 percent of GDP. The magnitude of

home improvement and maintenance spending is comparable to the more

widely followed indicator of new construction. The size and wide-ranging

nature of home improvement and maintenance and their integration with

other sectors of the economy makes this spending relevant to economists

outside the housing industry.
The data reveal that new construction is highly sensitive to the

business cycle and varies from 2 to 5 percent of GDP. On the other hand

home improvement and maintenance combined tend to be consistently around

roughly 2.5 percent of GDP. Figure 1 shows annual percent changes in the

three components of spending on housing. Inflation-adjusted values are

not available before 1999, but even the nominal figures, unsurprisingly,

show strong procyclical fluctuations and the tendency for housing to be

a leading indicator. However, even though all three components change

with the economy their individual sensitivity to the business cycle

varies. New construction is most sensitive and exhibits the highest

variability, while improvement and maintenance are much more stable. One

reason for this is that maintenance and repair are more difficult to

defer than new construction. Buying a new home is much more of a

discretionary expenditure than repairing a leaking roof.

There are several high frequency indicators for home improvement

and maintenance and repair. These statistics are typically based on

either contractor or homeowner surveys. Data collected from professional

installers omit information on DIY projects. However, contractors can

pick up on changes in the number and size of bids over time. In

addition, statistics based on the number of bids or home improvement

permits filed can serve as leading indicators.

One of the most important high frequency sources of national home

improvement data is the value of construction put in place (C-30 series)

published by the Census Bureau. Although it sees frequent revisions, it

nonetheless provides excellent insights when used alongside other

indicators. Value of construction-put-in-place includes the cost of
material, labor, contractor's costs, taxes, and other costs

incurred in the reported time period in owner-occupied dwellings. It

excludes maintenance and repair expenses. The primary source of the

construction-put-in-place estimates comes from the Consumer Expenditure

Survey, which is the same survey the Bureau of Labor Statistics utilizes

for its CPI computations. In turn, the BEA relies on the Census data to

compute investment in existing housing for the NIPA [Census Bureau

2014b].

The Leading Indicator of Remodeling Activity (LIRA) is a highly

respected indicator published by the Remodeling Futures Program at the

Joint Center for Housing Studies at Harvard University. The indicator is

benchmarked to the Census Bureau's home improvement data, which

exclude some things reported by the BEA such as spending on rental

units. The Joint Center employs a set of economic statistics that lead

remodeling to project LIRA forward three quarters [Joint Center 2014].

Several industry associations report indices based on information

from builders and contractors. One of the best known trade association

indices is the National Association of Home Builders' Remodeling

Market Indicator (RMI). The RMI is a builder sentiment index and is

based on market activity reported by remodelers. NAHB queries its panel

on three categories of activities: major additions and alterations,

minor additions and repairs, and maintenance and repair. The two

components of the RMI address Current Market Conditions and Future

Market Conditions [National Association of Home Builders 2014].

There are a few other proprietary indices of note. The National

Association of the Remodeling Industry publishes its own Remodeling
Business Pulse and includes the following subcategories: current

business conditions, number of inquiries, requests for bids, conversion

of bids, and sales value of jobs [National Association of the Remodeling

Industry 2014], Metrostudy's/Hanley-Wood Market Intelligence's

Residential Remodeling Index captures home improvement and replacement

projects but excludes maintenance projects valued at less than $1,000.

It utilizes information on household level remodeling permits and

consumer-reported projects, so it encompasses data for both DYI and

professional installations [Hanley Wood 2014], Finally, the BuildFax

Remodeling Index tracks the number of residential remodeling permits

filed [BuildFax 2014].

A highly detailed but less frequent survey of homeowner spending is

the biennial AHS. The AHS is administered jointly by the Census Bureau

and Department of Housing and Urban Development. Respondents are

interviewed about expenditures for remodeling, room additions and

renovations, systems and equipment, exterior additions and replacements,

interior additions and replacements, and disaster repairs [Census Bureau

2013].

4. Industry Drivers

There are a variety of factors that influence why and when

individual homeowners choose to upgrade or repair their homes. Home

improvement is an investment undertaken to either improve the quality of

life or to increase the home's value or both. It is generally

affected by the same macroeconomic variables that drive new

construction, that is, household income and wealth, employment, interest

rates, access to credit, and consumer confidence. Investment decisions
depend on rates of return. The major elements that affect the return to

remodeling are cash costs, imputed or cash rent, interest rates, and

home prices. Some projects, such as those that improve energy

efficiency, offer the benefits of reduced expenses.

Home prices influence the demand for home improvement through two

channels. First, prices determine the return to investment on home

improvement. Second, home prices affect homeowner equity and thus have a

wealth effect [Joint Center 2013].

The remodeling decision is also affected by tastes. Owners

modernize their homes as preferences for comfort, entertainment, living

space, and home offices change. An improvement in the perceived quality

of the home and surrounding neighborhood boosts confidence that home

prices will rise and encourage remodeling. Changing local code standards

may also trigger home upgrades.

Changes in the composition of the household, such as the ages and

number of members, affect the demand for remodeling. Increasing family

size leads to a desire for more useable space [Baker and Kaul 2002].

Some older homeowners choose to age in place rather than move; therefore

they renovate to improve accessibility. Other owners may stay to avoid

uprooting from the community, because they are financially locked into

the house, or because they have already customized the house to their

lifestyle [Culp 2011].

Turnover in the existing home market and household mobility have a

more ambiguous impact on remodeling. A slowdown in sales creates

incentives for homeowners to renovate to improve salability. Similarly,

if owners decide to continue living in the house until market conditions
improve they may want to make the home more comfortable. On the other

hand, an increase in home sales can lead to more remodeling as buyers

personalize their homes after they move in [Baker and Kaul 2002].

As previously discussed, maintenance and repair are less sensitive

to changes in the business cycle because they are more difficult to

defer than improvements. Repair and replacements on items such as doors

and windows, HVAC, and plumbing are a function of house-specific

characteristics such as age, the timing and quality of previous

maintenance activity, and accumulated net depreciation. A recent rise in

renovation spending can foreshadow either a continued increase or

decrease in maintenance in the near-term. On the one hand, it can

indicate that the owner has commenced a comprehensive set of home

improvement projects that will follow with more spending. On the other

hand, recent work on the house may also mean that it no longer requires

as much maintenance [Baker and Kaul 2002].

[FIGURE 2 OMITTED]

In 2014 the National Association of Home Builders asked remodelers

to rank different reasons homeowners gave for initiating home projects.

The scale ranged from 1 (never or almost never) to 5 (very often). As

can be seen in Table 2, the top two reasons cited are for improved

amenities and to repair or replace old components.

5. Industry Outlook

Relationship to the economy

Spending on housing is an indicator of the economy's health.

Both the Conference Board's Consumer Confidence and the University

of Michigan's Consumer Sentiment surveys track homeowners'
plans to purchase large household durables, which are often acquired

during home renovations and remodeling. To gain a perspective on the

prospects for home improvement it is helpful to examine how the

components of spending on housing have fluctuated over the last few

business cycles. As discussed above, Figure 1 shows that over the

business cycle the year-to-year percent changes in home improvement and

in maintenance and repairs are much more stable than for new

construction. The same pattern is seen in the shares of spending that

goes to each category. Figure 2 shows that during recessions the shares

of dollars spent on home improvement and maintenance rise at the expense

of new construction. Home improvement spending changes more slowly than

new construction so it tends to account for a greater proportion in a

downturn and a smaller share in a recovery.

[FIGURE 3 OMITTED]

There are reasons for owners to remodel in both good times and bad.

A boom creates incentives for investors to flip houses, that is,

purchase existing homes, renovate them, and then resell them. In a bust,

many homeowners realize they will stay in the house longer than

anticipated, so they undertake improvements to make the remainder of

their stay more comfortable. The American Recovery and Reinvestment Act

of 2009 encouraged modernization and upgrading of energy-efficiency in

existing homes, which stimulated home improvement activity [Joint Center

2013]. For the most part, maintenance and repair are not discretionary,

which causes the proportion to vary more as total spending on housing

fluctuates. Put another way, home improvement, maintenance, and repair

dampen the fluctuations in total spending on housing.
The cyclical pattern of housing spending is important for business

economists to understand. First, it indicates that the composition of

demand in the building materials, building products, and other

housing-related industries changes regularly over time. This has

implications for professionals working in fields such as distribution

and marketing. For example, in a recession the relative weight of

household spending moves away from purchasing new homes toward home

improvement maintenance and repair. Consequently, the aftermarket for

parts and services may comprise a larger share of sellers'

revenues. It may also increase the importance of the retail channels

compared with channels supporting new residential contractors.

A second implication for business economics in the residential

housing and allied industries is that the relative stability of

maintenance and repair activity affects forecasting. Housing starts is

the prime high frequency statistic used to measure the health of the

entire residential construction, home improvement, maintenance, and

repair industry. Starts are routinely included in consensus forecasts,

such as those published by The Wall Street Journal and the Federal

Reserve Bank of Philadelphia's Livingston Survey. Using permits and

starts as an independent variable to forecast sales for building

materials and products (as well as for goods associated with household

formation such as furniture or appliances) is a common practice.

However, a regression equation that includes starts but not home

improvement and maintenance is likely to result in an omitted variables

bias and overestimate the sensitivity of industry sales to a change in

housing starts. Spending on remodeling and maintenance is of the same
order of magnitude as spending on new construction; so ignoring the

former in a regression can have a significant impact on forecasting

accuracy.

Outlook

The home improvement, maintenance, and repair industry is

recovering from the Great Recession, and the short-term outlook is for

slow but continued growth. The most recent LIRA series is shown in

Figure 3. The Joint Center's LIRA projects continued strong growth

through early 2015 with sluggishness in the third quarter when the

annual growth rate settles down to 1.6 percent. According to the Joint

Center, the slowdown is attributed to a decreased growth rate in home

sales [Joint Center 2014].

There are many reasons to expect a bright outlook in the long term.

The industry is procyclical; so spending will continue to grow as GDP

rises. Additionally, the industry is facing the pent-up demand created

by underinvestment during the Great Recession. Foreclosed properties

need rehabilitation, and homeowners who put off renovation and

modernization will eventually have to make the investment. The aging of

the population will also contribute to spending as older owners retrofit

their homes. Another important demographic is the young adults, whose

homeownership rate has dropped since the housing bust. As this

group's finances and careers stabilize they will eventually invest

in housing. The long-run upward trend in existing homes sales and rising

home prices would also spur home improvement spending.

7. Summary and Conclusions

Understanding spending on home improvement, maintenance, and repair
is important for economists in the construction and allied industries

and for macroeconomists. From a macroeconomic perspective this spending

is about 2.5 percent of GDP, which makes it a significant indicator of

overall economic conditions. It is integrated into all stages of the

supply chain across a multitude of businesses ranging from architectural

firms to hardware and construction equipment, so its impact on GDP is

deep and broad. The distinction between investment and consumption

spending is also important for macroeconomists. Home improvement

increases the value of housing capital and may further affect aggregate

demand via a wealth effect. Maintenance and repair spending, on the

other hand, would not have that secondary effect.

Similar to the case of automobiles and appliances, households tend

to maintain and possibly improve a home rather than buy a new one when

the economy slows. This response to business fluctuations is vital to

capture in any forecast of the markets affected by the industry.

Anticipating such shifts helps plan the distribution and marketing of

products. Furthermore, accounting for these patterns can also lead to

improved forecast quality.

In conclusion, the influence of spending on existing housing

permeates throughout the economy. Whether working in the field or not,

the investment of time in understanding the industry would provide any

business economist with a good return.

Caption: Figure 1. Annual Growth Rates

Caption: Figure 2. Shares of Total U.S. Housing Spending

Caption: Figure 3. LIRA 4 Qtr Moving Total

REFERENCES
Baker. Kermit and Bulbul Kaul. 2002. "Using Multiperiod

Variables in the Analysis of Home Improvement Decisions by

Homeowners." Real Estate Economics, 30(4): 551-566.

BuildFax, December 15, 2014. BuildFax Remodeling Index.

http://www.buildfax.com/public/remodeling/index.html.

Bureau of Economic Analysis, November 2014. Concepts and Methods of

the U.S. National Income and Product Accounts.

http://www.bea.gov/national/pdf/all-chapters.pdf.

Census Bureau, 2006. "Survey Definitions and

Explanations." SORAR definitions,

http://www.census.gov/construction/ c50/sorar%20definitions.pdf.

--, 2009. "Concentration Ratios." The Economic Census.

http://www.census.gov/econ/concentration.html.

--, 2013. Table C-16-00 Home Improvement Costs--Owner-Occupied

Units. 2013 American Housing Survey.

http://www.census.gov/programs-surveys/ahs/data/2013/

national-summary-report-and-tables--ahs-2013.html.

--, 2014a. 2012 County Business Patterns. http://www.

census.gov/econ/cbp/index.html.

--, 2014b. "Methodology." Construction Spending, http://

www.census.gov/construction/c30/methodology.html.

--, 2014c. Historical Value Put in Place. http://www.

census.gov/construction/c30/historical_data.html.

Culp, Robert. 2011. "Relocate then Renovate: An Empirical

Analysis of the Role of Environmental Attributes in the Home Improvement

Decision." Journal of Housing Research, 20(1): 53-66.
Emrath, Paul. 2014a. "Impact of Home Building and Remodeling

on the U.S. Economy," Special Studies, National Association of

Homebuilders. May 1. http://www.nahb.org/generic.aspx?

sectionID=784&genericContentID=227858.

--, 2014b. "Number 1 Reason to Remodel: Simple Desire for New

Amenities." Eye on Housing. National Association of Homebuilders.

May 7. http://eyeonhousing.org/2014/

05/number-1-reason-to-remodel-simple-desire-for-new-amenities/.

Hanley Wood, 2014. Economic Outlook/RRI. http://www.

remodeling.hw.net/benchmarks/economic-outlook-rri/.

Joint Center for Housing Studies of Harvard University, 2013.

"The US Housing Stock: Ready For Renewal". http://www

.jchs.harvard.edu/sites/jchs.harvard.edu/files/harvard_jchs_

remodeling_report_2013.pdf.

--, 2014. "Leading Indicator of Remodeling Activity

(LIRA)." http://www.jchs.harvard.edu/leading-indicator-remodeling-activity-lira.

National Association of Home Builders, 2014. Remodeling Market

Index (RMI). http://www.nahb.org/reference_list. aspx?sectionID=136.

National Association of the Remodeling Industry, November 3, 2014.

"Remodeling Conditions Continue to Show Strong Growth." NARI

National News. November 3. http://blog.

nari.org/2014/11/03/remodeling-conditions-continue-to-show-strong-growth/.

(1) Strictly speaking, as the definition below shows, remodeling is

a subset of home improvement.

EMIL B. BERENDT *

* Dr. Emil Berendt is Assistant Professor of Economics at Mount St.
Mary's University in Maryland. He has a Ph.D. from the City

University of New York Graduate Center. Prior to his current position he

worked for Owens Coming forecasting the building materials and housing

markets. He also worked for AT&T for eleven years in forecasting and

regulatory economics. In addition to his corporate work he taught at

several universities, including the University of Wisconsin and Friends

University. He taught courses in topics such as economic theory,

econometrics, managerial economics, and business research methods.

Table 1. U.S. Home Improvement Activity in

2010-11 Total expenditures ($1,000)

Remodeling Kitchen $26,860,214

Bath $18,835,493

Room additions and Kitchen $1,616,234

renovations Bath $4,658,657

Bedroom $12,712,209

Recreation room $2,933,928

Other $15,091,770

Systems and Plumbing/pipes $3,611,852

equipment Electrical system $4,303,891

Plumbing fixtures $5,982,976

HVAC $26,590,846

Appliances/major equipment $8,674,551
Exterior additions Roofing $36,296,738

and replacements Siding $7,500,956

Windows/doors $16,799,885

Interior additions Insulation $3,081,164

and replacements Flooring/paneling/ceiling $27,680,168

Other interior $5,667,635

Other additions and Deck/poreh $2,644,341

replacements Patio/terrace/detached deck $11,350,080

Garage $2,234,424

Carport $454,735

Shed $8,329,944

Swimming pool/tennis court/ $4,965,880

recreational structures

Other exterior $19,834,547

Disaster repairs $24,098,612

Source: 2013 American Housing Survey. Table C-16-00.

"Home Improvement Costs-Owner-Occupied Units".

Table 2. Reasons for Remodeling

Desire for better/newer amenities 4.3

Need to repair/replace old components 4.2
Desire/need for more space 3.7

Want to avoid moving/buying another home 3.2

Repairing a damaged property 3.0

Desire to be able to age in place 3.0

Energy efficiency/environmental concerns 2.7

Want to increase value of home as an investment 2.6

Change in number of people living in the house 2.1

Getting nondistressed property ready for resale 1.8

Getting ready for REO/short/other distressed sale 1.3

1 = never/almost never. 5 = very often.

Source: Emrath [2014b].

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