Investor Demand Aiding Home Improvement Sector: Report

The home improvement sector is seeing a lot more activity thanks to investors who are demanding homes in need of repair and homeowners who are tackling renovations they once avoided.

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According to a ""Bank of America Merrill Lynch Global Research"":http://www.ml.com/index.asp?id=7695_8137 report, renovation spending now accounts for about half of the construction expenditures market; historically, renovation spending has made up about a quarter of the market.

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The report also stated retail sales of building materials rose 5.9 percent from November to March, and Private Fixed Residential Investment, which includes repairs such as bathroom remodeling and window replacement, increased 11.2 percent in the second quarter.

“While the home remodeling market is often overlooked, it is helping to lead the broader housing recovery,” said Michelle Meyer, senior U.S. economist at BofA Merrill Lynch Global Research and co-author of the report. “There are some near-term macro headwinds, but also strong underlying trends that will sustain spending for years to come, creating a long-term investment cycle.”

The report expects demand for distressed properties to continue in the near-term and noted industry surveys reveal more than one-third of distressed properties sold in 2012 went to investors.

BofA Merrill Lynch Global Research analysts also expect higher employment rates for young adults, which will lead to the formation of new households over the next several years.

""As small-scale renovations give way to bigger ticket home remodeling projects and properties turn over to new owners, a wide range of companies and sectors stand to benefit,"" said Denise Chai, retail analyst at BofA Merrill Lynch Global Research and co-author of the report.