DIY Anyone?

A friend of mine has worked a home improvement niche for many, many years. She was extremely worried until a bit ago because much of her business was tied to new home construction. But now she’s seen an upturn in her business again.

I hypothesized that many who were contemplating major renovations had instead decided to go with the sort of relatively inexpensive cosmetic changes she provides.

Today’s Calculated Risk contained some figures that support my theory:

Home improvement is at 1.20% of GDP, off the high of 1.30% in Q4 2005 – but still well above the average of the last 50 years of 1.07%.

Since she’s quite skeptical of any attempts to predict the future, I probably won’t tell her about the line that follows:

This would seem to suggest there remains significant downside risk to home improvement spending over the next couple of years.

If you want to know about the downside, take a look at the graph under this posting: Residential Investment Components by CalculatedRisk on 2/02/2009 11:09:00 AM

Cassandra

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