The U.S. home improvement industry is stronger than it has been in over ten years and encompasses the sale of building materials, appliances, décor, and other home enhancements, and the services offered by contractors, tradespeople, and other workers who help to build, install, modify, and upgrade homes. The business of homeownership represents a significant portion of the U.S. economy.
With a nationwide shortage of housing and record-high home prices, more homeowners prefer to stay in their properties versus move or upgrade to new ones. The deficit doesn’t just affect owner-occupied properties. Rental housing is also increasingly scarce. It’s no wonder that nearly half of American homeowners are living in the first home they purchased. Of those who have lived there for longer than six years, 61% will choose to renovate instead of move. These homeowners are staying in their homes and spending considerable resources on remodeling, renovations, and redecorating. Whether it’s on discretionary or necessary projects, consumers spent 17% more in 2018 on their homes than in 2017.
As the bulk of existing residential properties in the United States ages, new construction struggles to keep up with increasing demand. In this housing market, the business of the upkeep, maintenance, and improvement of existing properties flourishes. Home improvement spending still outpaces home maintenance spending.
Home improvement can encompass a project as simple as repainting a room or as complex as gutting an interior. Homeowners are increasingly choosing the do-it-yourself or DIY option, and big-box stores such as Home Depot make it easier than ever. Both Lowes and Home Depot offer workshops and classes. They stock vast selections of materials that would have been found mainly in contractor supply houses even a decade ago. Tool and equipment rental stretches the budget and increases accessibility to homeowners who would never be able to afford a project otherwise.
Many regions in the U.S. are experiencing favorable economic conditions that tend to coincide with remodeling activity, such as strong growth in both employment and home value. As home prices continue to rise, more homeowners are choosing to invest in home improvements and renovations. According to the Joint Center for Housing Studies, there is a proven connection between changes in median home values and home improvement spending. Homeowner equity assures homeowners that they can indeed afford the projects they could not afford during the great recession.
The bulk of projects Americans are undertaking are small scale (under $5,000), but big projects such as renovating kitchens and baths are growing in popularity. Most homeowners spent between $5,000 and $10,000 improving their homes in 2018, with those in more densely populated and metropolitan areas spending closer to $18,000. Home improvement and renovations in the U.S. totaled over $350 billion. $194 billion of that figure represents the 13 million projects started in 2018 that cost the homeowner over $1,000. Those with higher incomes and multiple properties tend to remodel more and undertake home improvement projects more frequently. 25% of homeowners spent between $10,000 and $25,000 on their home improvement and renovating projects in 2018.
American homeowners place a high value on making their homes more beautiful and functional. Self-expression and individuality are increasingly reflected in our physical environments, and cookie-cutter homes are very much out of style. There are even websites such as mcmansionhell.com dedicated to how mediocre and awful the home trends over the last few decades was.
Homeowners in the U.S. indicate that improving the design and functionality of their homes is typically the most significant consideration when planning a remodeling project. In the age of Pinterest and a surging number of millennial homeowners who share their lives on social media, the appearance of one’s surroundings and home becomes increasingly important. Those who own rental properties have to keep up to attract and keep good tenants. For example, a prospective renter is more likely to be attracted to a property with a neutral grey or greige painted rooms than a rental with white walls.
The biggest reason most homeowners chose to undertake new projects is changed circumstances that make it possible. With their homes reaching record values and the corresponding increase in home equity, they finally have the means to get new flooring or that fancy kitchen and bathroom. Many homeowners indicated that the projects they were spending on in 2018 had been deferred during the recession. The improvements they chose to do have been planned for a while.
Next is the desire to customize a recently purchased property, or to upgrade a home that’s aging or has been damaged. And many more want to upgrade a home before selling it to maximize the home’s value. With the exception of property owners and buyers looking for investment properties, a beautifully redecorated and renovated “plug and play” home will have far more buyers or renters making offers on it than a project home. Properties that outwardly indicate the need for more money to be spent to bring it into the 21st century are not always as attractive. Viewing old listing photos of a property that was sold, renovated, and “flipped” back on the market for a higher price are a great way to see this principle in action.
Nearly half of the homes in the U.S. were built before 1980, and 38% before 1970. The median age of homes in the U.S. is rising, and as homes age, the need for upgrades, improvements, and renovation will only continue to grow. New construction has slowed, and with most homeowners living in homes that were built before 1979, fixing up and improving the appearance of an aging home is a more affordable option. 28% of property owners indicate that renovating is a more affordable option than buying a property that would be more aligned with their needs.
The longer a homeowner remains in their home, the more likely they are to want to renovate than relocate.
Many home improvements not only enhance the homeownership experience and make a residence more appealing and comfortable, but they can also save money. The builders of older homes did not always place the same values on efficiency as we do today or have the kinds of materials and technology available. Upgrading and renovating the house can yield long term savings on both the utility and insurance bills and keep the home safer.
The Most Popular Home Improvement Projects & Products
Americans are improving the appearance and comfort of their homes, starting with the kitchen and bathrooms first. While these are higher-ticket projects, the potential for return on the investment made is high, especially if the property will be sold or rented.
With 71% of homeowners undertaking improvement or renovation projects including interior or exterior paint, this is by far the most commonly purchased home improvement product. The paint section in most home improvement stores can take up as much as a fifth of the store.
Most Wanted Projects: Kitchen and Bath
Kitchens and baths continue to be the most popular projects, even though they are the most pricey and involved. Many homeowners regard their kitchens as a central gathering place in the home. Healthy food, cooking, and nutrition are increasingly valuable to younger generations of homeowners and having a beautiful, functional kitchen to cook in is part of a coveted lifestyle.
Kitchens and bathrooms can also be the most unsightly areas in a house as they age because they are the most difficult to transform and update. It’s easy to go through a home and change paint colors, remove tired brass doorknobs and replace with more trendy brushed nickel or oiled bronze hardware, and hang new curtains. Even new carpet and flooring projects can often be completed in less than a week.
Replacing grimy tile, discolored and crumbling grout, avocado green countertops and cracking 1970s oak cabinetry can be a little more involved. Malfunctions in the plumbing systems in these areas of the home can cause far more damage to a home than an ugly doorknob. Hence, not all homeowners’ desire to upgrade kitchens and baths is aesthetically driven.
Kitchen projects are costing more, with the average spend in 2018 on both large and small projects increasing by 27% from last year. The cost of upgrading bathrooms also grew as much as 17% in the last year. This is partly caused by increasing tariffs on products such as tile, plumbing, and other building materials. Only 35% of homeowners were choosing to enlarge their kitchen vs. 41% last year in 2018. More luxurious finishes and features are becoming increasingly popular, and this is where many homeowners are choosing to spend.
The percentage of our population who are aging comprise over 50% of the homeowners who are renovating and remodeling their homes. This demographic is often overlooked, but they spend the most money. Accessibility is becoming increasingly important to them, and they regularly will invest in home improvements and upgrades in their bathrooms like walk-in tubs and smart toilets. This is a growing market as more seniors want to age “in place” and remain in their homes as long as possible.
Smart Home Improvement
Security and “smart” enhancements for the home represent a growing share of the market, with spending increasing as much as 20% each year since 2016. Nearly half of the renovation projects undertaken by homeowners will also include smart technology.
Home automation is nothing new, but technology has become highly sophisticated. Smart systems and devices are made to automate or remotely control home systems and functions such as thermostats, lighting, security systems, and even vacuum cleaners. These are managed through an app on a phone, on a computer, or another interface.
For those who own properties such as Airbnb and short term rentals, utilization of smart technology to facilitate access, check-in/check-out and other functions can save money, time, and enhance the experience of the renter. Upgrading a home’s security systems can also save money on homeowners’ insurance.
For property owners who have long-term tenants, the use of certain smart technology may be considered a potential violation of privacy. However, there are many options to keep property safer and still give tenants privacy. New technology can send instant notifications of gas leaks, temperature fluctuations, smoke, and even water leaks. This technology can help a property owner act quickly to mitigate the amount of damage done.
Home security continues to be the most popular upgrade, with an increase of 18% of homeowners opting for it in 2018 vs. 15% in 2017, and 12% in 2016. The most popular smart home upgrades for security are alarm/detection systems, motion-activated lighting, garage door openers, cameras, and video intercom/doorbell systems. Outdoor security is also increasingly popular.
Smart technology for entertainment systems is nearly as important, followed by climate control. Smart thermostats help increase a home’s comfort and energy efficiency and continue to be one of the most common smart devices installed in newly renovated homes.
Millennial property owners tend to spend more on smart technology and place a higher value on the high-efficiency and performance of their home’s systems. 77% of millennials invest in smart and security technology vs. 25% of baby boomer homeowners.
While one might think the smart home is the domain of the millennial, many individuals are turning to smart technology to help aging members of their families. This growing demographic of baby boomers who are homeowners are making plans to live in their homes longer. Smart technology can help make their lives easier and keep them safe. Smart thermostats help seniors regulate both the temperature and the utility bills. Security systems and electronic door locks can keep things safe and allow family members to monitor the home.
Home Improvement, Home Maintenance, & Emergency Spending
One in three homeowners had to complete an emergency improvement in 2018, with an average cost of $1206.00.
Many homeowners in regions where hurricanes or other natural disasters have hit intend to repair or reinforce their homes. Some insurance companies offer incentives and discounts to homeowners who add certain upgrades to their homes. For example, an owner of a property in a coastal area in Florida may receive a discount on their homeowners’ insurance policy if they install storm shutters. Property owners in hail-prone states may see a discount by putting a new and stronger roof on their home.
And more commonly occurring than natural disasters are malfunctioning plumbing or other systems within the home or property that can cause damage.
Aging plumbing and electrical systems can keep a homeowner awake at night. But newer is not always better. Statistics show owners of more modern homes tend to spend more on emergency repairs. It’s interesting to note that homeowners may spend as much as $3.70 less per year since a house was built on emergency home projects.
However, older homes do come with their share of problems. One of the most common issues necessitating an upgrade in an older home is electrical systems not being grounded or able to handle the load that a modern household’s appliances can place on it. If a homeowner purchased a home with service lower than 100 amps or charming antique knob-and-tube wiring, they might find a hard time finding an insurance carrier who will insure the property.
DIY vs. Professional Home Improvement
Over a third of home improvement projects are commonly considered DIY, such as interior painting. However, projects like exterior improvements (replacing windows, siding, roofing, etc.) are rarely attempted by the average homeowner. These are pretty specialized projects with the potential for a lot to go wrong.
As much as Home Depot reassures homeowners that “you can do it and we can help,” more than four out of five homeowners hire professional and licensed specialists to assist with projects. 51% of homeowners hired licensed tradesmen such as plumbers or electricians, 36% hired a construction manager, and 20% chose to hire a designer or architect.
Americans love to watch home improvement television shows, but most do not have the time or consider themselves knowledgeable enough to undertake certain projects themselves.
Many projects done improperly by homeowners can result in more problems down the road. Remodeled homes are notorious for code violations, especially if the homeowner or an unqualified contractor did the work. Whether it’s a failed inspection when a home is being sold, or a buyer purchasing a property that is fraught with problems caused by shoddy “Johnny Homeowner” work, homeowners are becoming increasingly wary of the pitfalls of trying to do it yourself.
The good news is that there are many websites dedicated to helping match up property owners with reputable home improvement professionals. It’s easier than ever to do the work you need yourself and hire professional help for the big projects.
The home improvement industry shows no signs of slowing down. Homeownership will always mean maintenance and as the years pass, renovating and upgrading. Home remodeling, decorating, and landscaping is a popular American pastime. Baby boomers undertake bigger, more involved projects and millennials tend to focus more on the decorating side. Home improvement retailers are happy to accommodate both. Regardless of the condition of our economy, the age of most of the housing stock in the United States and the nature of the housing market will ensure the parking lots are always full every weekend at Home Depot, Lowes, Menards, and other home improvement stores.
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