The Numbers Are In: Is The U.S. Real Estate Market Back To Normal?

In 2015, both new home sales and home remodeling projects are on the rise. For middle-class Americans, rising home equity lines of credit are leading to a surge in remodeling and home-improvement spending, especially because so many such projects were delayed during the Great Recession. About 47% of U.S. homeowners haven’t updated their home design since the beginning of the recession.

At the other end of the economic spectrum, luxury home sales are also ticking upwards in 2015. A new luxury real estate report compiled by CNBC and Redfin showed that luxury home sales jumped 13% this year. The inventory of luxury homes for sale saw a dramatic rise as well. For instance, in Houston the inventory grew by leaps and bounds, rising 48.2% so far this year, while the inventory of luxury homes priced above $5 million grew by 10% nationwide.

Even so, while home equity lines of credit and home sales rise across income levels, new home construction has lagged behind. Now, the nation’s largest insurance companies are taking proactive steps to avoid losses in the relatively weak market for luxury home construction.

This July, AIG launched Smart Build, a risk aversion service for luxury home builders. The program will help builders use the latest safety technology and environmentally friendly practices, and avoid risks from natural disasters, particularly in luxury homes built at low sea levels, such as in the Hamptons and South Florida.

“We’ve seen firsthand on many occasions what can go wrong in a luxury home, and in many instances we know damage could have been avoided by better planning in the design and building phases,” said the Senior Vice President of Risk Management and Loss Prevention with AIG, Stephen Poux. “Smart Build gives AIG a seat at the table from the very start of the design process to increase the likelihood that our customers will enjoy the safest, most resilient home possible for many years to come.”

And, of course, the insurance company hopes the new pilot program will have a positive effect on their bottom line as well, preventing large, expensive claims before they’re ever filed.

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