Looking for a glimmer of hope in the housing market? Look down, specifically at the basement, which is one segment of the remodeling market that is growing, according to a new report.
The Rockville, Md.-based market research firm Specialists in Business Information (SBI) reported that the professional basement finishing market grew at a compound annual rate of 21 percent between 2005 and 2007, from $15.1 billion to $22.2 billion, despite an overall decline in housing sales and home improvement expenditures.
SBI forecasts that the professional basement finishing market will grow 5 percent in 2008 to $23.3 billion and 7 percent through 2012 to $30.6 billion, as the housing market and general economy improve.
The professional basement finishing market, for the purposes of the study, is that portion of remodeling work done by contractors.
While there is typically a correlation between home sales and spending on home improvements, there are exceptions. “While remodeling is down nationally, some markets continue to churn with activity,” said Lonny Rutherford, Remodelers chairman of the National Association of Home Builders. He pointed to basement projects as one of them.
The SBI cited a 2007 report from Remodeling Magazine showing that basement remodeling recoups more than 75 percent of the cost of remodeling on average. Also, finishing a basement costs about 50 percent of the cost to add a room or rooms of comparable space. Finishing a basement also makes it easier to heat the house in the winter and cool in the summer, which adds to energy savings, the SBI said.
While stud and drywall contractors continue to make up the bulk of the basement finishing business, there has been some movement toward systems panels that attach directly to the unfinished basement wall.
“The basement systems finishing industry is in its infancy and has great upside potential,” said Dan Fitzgerald, director of marketing for Seymour, Conn.-based Basement Systems, which entered the systems panels business in 2007.