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Responsible lending act met with praise--Professional organizations push for congressional hearings

National Mortgage Professional
May 23, 2005

Study quantifies home improvement activities of recent homebuyersMortgagePress.comhome improvement, Home Improvement Research Institute, HIRI Proving for the first time what conventional wisdom has long held, a new study finds that a majority of homeowners make improvements to their homes within the first year of purchase. Many consumers also make improvements to their previous homes to prepare them for sale. Kitchens, bathrooms and living rooms are the most likely interior spaces to be improved in both newly built and existing homes. Owners of newly built homes are also likely to do landscaping projects. The report, released at the 2004 National Hardware Show, was commissioned by Reed Exhibitions and conducted by the not-for-profit Home Improvement Research Institute (HIRI). The study found that 52 percent of recent home buyers had completed one or more home improvements within the first year of purchase, and half were planning at least one more project within the next year. The most frequently purchased products include paints and sundries, lumber and building materials, and floor coverings. Overall, recent home buyers spent more than $3,100 during the first year. Buyers of older homes spent an average of $2,000, while those who bought new homes spent an average of $5,000. Owners of older homes most frequently cited a desire or need to replace worn-out or old materials, while owners of new construction were most often seeking to beautify the house. Purchases of both types of homes reported that they did improvements to support new features and change the decor. About 40 percent of respondents also said that they made improvements to their previous home to get it ready to sell. The most common improvements prior to sale are painting kitchens and bathrooms. One third of those selling older homes made structural improvements to the exterior or interior of the house, such as replacing or repairing roofs, windows or doors; repairing or replacing interior walls or ceilings; or converting a room to a different use. Consumers selling new homes were more likely to install carpeting and improve landscaping prior to sale. Newer homes vs. older homes Purchasers of existing homes are more likely to paint interior spaces; replace or repair flooring; do electrical wiring; and install new lights and appliances. Owners of new construction are more likely to landscape and build patios or decks. Not surprisingly, owners of existing homes have completed and are planning more improvements than owners of new construction. As noted, however, owners of new construction spend more on their improvements. Purchasers of newly built homes had a higher average household income than those who purchased older homes, increasing the likelihood that more high-priced products would be purchased. Purchasing home improvement services and products Overall, contractors are involved in about one-third of projects done to newly purchased homes and nearly half of the projects completed in previous homes prior to sale. Consistent with other HIRI research, homeowners most frequently used contractors who had done previous work for them or who were recommended by family and friends. About 10 percent of the projects included installers from home improvement retailers. Regardless of professional involvement, it was the consumers who most often purchased the products. The Home Depot and Lowe's were cited as sources for about three-quarters of those purchases. Paying for home improvements Most consumers said they used money from savings to pay for their recent projects. Those who purchased existing homes were more likely to use their savings (77 percent) than purchasers of newly built homes (94 percent). Less than 10 percent of home buyers used credit cards to pay for improvements, and two percent said that they used money from a loan or excess mortgage money. For more information, visit www.hiri.org.
Published
May 23, 2005
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