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San Diego Could Become Next Target for Millennial Home Remodeling

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ServicePair is making the crossover to the millennial mindset before they even know they’re ready for a remodel.

ServicePair is a free mobile app that allows construction industry workers – contractors, subcontractors, carpenters, electricians, plumbers and designers, among others – post their work history, job qualifications, availability and salary expectations online.

Instead of the hassle of a middleman or staffing agency to get workers in a field shorted of the resources, ServicePair serves as a virtual job board.

This will become increasingly handy in light of new findings from the Harvard Joint Center for Housing Studies released this February.

The study revealed that while older owners spend to account for accessibility and reinvest in their homes, millennials are entering the remodeling market en masse.

This could mean great things for San Diego where the financial ecosystem is shifting to allow millennials to buy and renovate the more affordable, older homes in lieu of the expensive condo.

 

Eating Space

Home improvement spending could grow from $220 billion in 2015 to almost $270 billion in 2025. While more growth is projected in the east where there are lower cost markets, owners under 35 years old with homes built before 1980 invested a third more in renovations or 16 percent above the national average.

San Diego is down 12.8 percent in 2017 and home ownership sits at 20 percent. The study suggests that these market indicator cities on the west coast are leveling off, approaching cyclical peaks. Even metros with high home values are expected to post above-average improvement spending per owner in the short term.

This mindset translates into the new age construction worker who needs to keep up with the demands and the influx of work that will come in due time, said Chad Arendsen, founder of ServicePair and owner of Chad of All Trades, a home remodeling contracting firm, based in San Diego.

Tradespeople need to be ready for the “summer” that is coming in the industry. All segments of the home remodeling market have grown, surpassing the previous peak in 2007 of $318 billion. Younger households will continue to make decisions on the basis of affordability over location and lifestyle preferences.

Even with these challenges, homeowner improvement spending should grow, on average, two percent annually over the coming decade. With younger owners entering the market, certain niches in the remodeling industry could experience growth, namely alternative energy sources, and demand could increase for companies that use renewable and recycled building products, improve water conservation and address indoor health concerns. Home automation is also experiencing growth.

Nowadays, self-employed contractors represent over 88 percent of the growth of remodeling establishments from 2007-2012. These contractors and payroll firms with over half of their business in remodeling and repair grew from 530,000 businesses in 2002 to over 650,000 in 2007. In 2012, those numbers jumped to 716,000.

Living Area

In any given year, about one in five residential construction businesses open and another one closes. The size of the construction labor force has dropped 20 percent after the recession. None of these are surprises, and the construction industry needs to focus on building the skills required to train a new workforce.

“The remodeling industry should see numerous growth opportunities over the next decade,” said Chris Herbert, managing director of the Joint Center for Housing Studies, in a release from Harvard. “Strong demand for rental housing has opened up that segment to a new wave of capital investment, and the shortage of affordable housing in much of the country makes the stock of older homes an attractive option for buyers willing to in invest in upgrades.”