It's morbid — and a bit of a cliché — to say that someone benefits from a natural disaster, but if you're looking for a silver lining in the thunderclouds that lurked over the Southeastern United States during hurricane season, you'll find it in the projected home improvement spending numbers recently released by the Home Improvement Research Institute.
Conducted in conjunction with economic consulting firm Global Insight, the report estimated that $2.5 billion will be spent in 2004 on products to repair residential structures damaged by hurricanes.
Over a month-long period beginning in mid-August, three powerful storms made landfall, with Florida bearing the brunt of the damage.
The report estimates that an additional $1.5 billion in product spending related to hurricane repairs will be incurred by homeowners in 2005.
The “extra” dollars spent push HIRI's projection of home improvement product sales to a record $271.4 billion, which would be a 12.8% increase over HIRI's estimated 2003 total of $240.6 billion. It also represents a better than 3% jump over the 2004 projection of $262.7 billion that HIRI made in June.
The difference between 2003 and 2004 spending represents the highest growth rate since 1992, which is as far back as HIRI has consistent, reliable data. While hurricane-related spending certainly gave a boost, an overall strong housing market —fueled by low interest rates and high levels of new home and existing home sales —was the real key.
Looking forward, HIRI and Global Insights predict that the home improvement industry will remain strong. The current projection is for only moderate growth in spending for the next five years, but that's consistent with past data. In 1994, spending was up 8.9% from the year before, but growth planed off for several years until 1999, when spending increased by 9.3% from 1998. Growth then moderated once again until the spike this year.