Spending on Distressed Properties Boosts Remodeling
Note: Bank-owned distressed properties include those sold by Fannie Mae, Freddie Mac, FHA or private banks. Source: JCHS, N13-1, Home Improvement Spending on Distressed Properties
According to our estimates, from 2007 to 2011, annual spending to distressed properties saw an increase of nearly $6.7 billion. As a share of all home improvements and repairs by owners, spending on distressed properties grew from just 1% in 2007 to 4% in 2011. While much of this spending follows a period of under-investment as properties sat vacant through the foreclosure process, more recently additional funds are being spent to get these homes back into active stock.
According to a 2012 Federal Reserve White Paper, the flow of new REO homes should remain high in 2012 and 2013. If this prediction bears out, then the level of repair and improvement spending to distressed properties in the next two years should remain roughly similar to the nearly $10 billion levels reached in 2011.