Home-improvement spending up

The home will be the gift recipient that comes away with the most this season, according to a recent survey from Deloitte & Touche, the consulting firm.

U.S. consumers plan to spend an average of $628 on improving their house this holiday season, up 84 percent from the $341 they said they'd spend in 2003 at this time.

That means, of the total $2,348 consumers say they'll spend this holiday, the biggest portion will go to the home, with 27 percent going to home improvement, while 26 percent will go to gifts, 17 percent to socializing, 12 percent to charity, 9 percent to entertaining at home, 7 percent to nongift clothing, and 2 percent to holiday-specific furnishings, according to the 20th annual Deloitte survey of 17,440 consumers, taken in October.

The survey didn't define "home improvement," so consumers could be counting everything from buying new furniture to remodeling.

While a big portion of holiday dollars is going to home improvement, that simply reflects pricier items, said Richard Giss, a partner in Deloitte's consumer business practice.

"If I buy a china hutch or a dining-room table, the outlay in dollars is enormous relative to other gifts I might give," he said.

It's likely consumers' drive to beautify their homes is connected to rising house values in recent years, he said. "There's a belief that 'I can spend on my home and get the money back,'" Giss said.

Even buying furniture appears, to some consumers, to add to the home's value, he said. Furniture is a depreciating asset, "but no one thinks of it that way, and if you do any repairs to your home, people think that adds to the value of the house," Giss said.

Plus, "there's more entertainment done at the holidays," he said. "It's a natural time to assess your home."

But if you look solely at the kind of home improvement that involves construction, activity tends to be highest during the spring and summer months, said Kermit Baker, director of the remodeling futures program at Harvard's Joint Center for Housing Studies.

Homeowners spent more than $139 billion on home improvement in the third quarter, up 4.4 percent from a year ago. But that growth rate appears to be easing slightly, Baker said.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.