Americans are pouring record amounts into home remodeling this year. A shortage of new single-family homes, along with surging home prices, is locking many buyers out of the market, The Wall Street Journal reports. That has prompted more homeowners to turn to renovating their existing home.
Americans are projected to spend a record $316 billion in home remodeling this year, according to Harvard University’s Joint Center for Housing Studies. That is up from $296 billion one year earlier.
Homeowners are tapping into their savings or home equity to complete the renovations. They are showing an increasing confidence once again in wanting to invest in their homes.
During the housing downturn and subsequent recovery, Americans weren’t investing very much in their homes. Many owners had lost value on their homes and the idea of sprucing it up was far from their minds. The home-renovation market hit bottom in 2009 with Americans spending $222 billion on renovations. That is about 30 percent less than today.
Flash forward to today, consumer confidence is being buoyed by rising home prices and prompting more owners to spend on big-ticket items, such as full kitchen remodels and additions, The Wall Street Journal reports. In the last 12 months, the average household expenditure on home renovations rose 57 percent, according to HomeAdvisor, a homeowner and contractors website.
Still, when adjusted for inflation, expenditures on home renovations remains below the 2006 peak. During that time, rising home prices caused millions of Americans to refinance their homes and embark on fancy upgrades to their home. Home renovation spending that year, when adjusted for inflation, was about $334 billion, according to the Joint Center.
Source: “Americans Pour Record Sums Into Home Improvements,” The Wall Street Journal (July 25, 2017)