PALO ALTO, CA — This year is on track to be “another boom year for home renovations,” with more than half of surveyed U.S. homeowners planning to begin or continue renovations undertaken in 2016 – and both first-time and repeat homebuyers taking on large-scope projects.
That’s the key finding of the sixth annual “Houzz & Home” survey, conducted among more than 100,000 respondents by Houzz, the Palo Alto, CA-based online platform for residential remodeling and design.
The survey found that homeowners plan to spend an average of $27,300 on home renovations in 2017, a 4% increase from 2016 spending levels of $26,400. Average investment in living spaces increased 11% in 2016, compared to 2015, including living/family rooms ($5,400), dining rooms ($2,600) and guest bedrooms ($1,900). Laundry room spending was up 24%, averaging $2,800, and master bedroom spending increased 23% ($3,400). Spending on kitchens and master bathrooms remained relatively flat ($19,100 for kitchens and $11,700 for master baths, averaged across a wide range of room sizes and project scopes).
“Recent homebuyers drive a significant share of home renovations today, with repeat buyers investing twice as much in their home as first-time home buyers,” said Nino Sitchinava, Houzz principal economist. “Younger and cash-constrained first-time buyers are responding to the low inventory of affordable homes by purchasing properties that require more than just cosmetic upgrades. Not surprisingly, we are seeing their spending on home renovations increasing significantly in 2016 and expect this trend to continue through 2017.”
Among the survey’s other key findings were the following:
The survey revealed an uptick in credit card use to pay for renovations (23% in 2016 versus 21% in 2015). First-time buyers are nearly twice as likely to use credit cards than long-term owners (39% versus 21%, respectively) and three times as likely to rely on gifts (15% versus 5%, respectively). However, cash remains king, with 91% of homeowners using cash for part or all of their project. Loan financing continues to be uncommon, with just 11% of the survey respondents reporting they took out a secured bank loan to fund their projects. Of those, 71% relied on home equity lines of credit.
In 2016, finally having the time and the financial means continue to be the top reasons why homeowners start renovations (37% and 36%, respectively). Wanting to customize a recently purchased home drives over a quarter of homeowners (27%), while just over one in 10 (12%) is motivated by preparing their home for resale.
The top challenge for homeowners was staying on budget (47%). Other top challenges include finding the right products and materials (32%) and finding the right service providers (29%).
Over a quarter of homeowners (28%) consider integration of smart technology as very important to their renovation, up from 25% in 2015. This is especially true for recent homebuyers, who are more likely to prioritize integrating smart technology during renovation projects. Recent buyers are also more likely to consider addressing health concerns very or extremely important (52% for first-time buyers versus 44% for repeat home buyers and 37% for long-time homeowners). ▪