Despite recession fears, homeowners who want to stay put are moving ahead with renovation plans, and you can guide your clients through the improvement projects they should prioritize. After all, 22% of homeowners say ROI is their top motivation for remodeling, according to a new Houzz survey. So, they need your expertise when it comes to resale potential.
Homeowners also may look to you for recommendations on contractors, as 35% say it’s challenging to find reputable professionals to work on their projects. Still, 37% of homeowners started a remodeling project this year, and nearly a quarter says they plan to start one next year, the Houzz survey shows. Kitchen and bathroom renovations remain the most popular projects, for which homeowners spend a median of $25,000, the survey found.
“Limited choices of available homes and rising interest rates are driving many toward renovations and improving their current home,” says Marine Sargsyan, a staff economist at Houzz. “Additionally, more than half of the homeowners we surveyed have no intention of selling or moving out of their current residences in the next 20 years—or ever.”
Homeowners also are sitting on a bigger nest egg: The average mortgage borrower had about $300,000 in home equity at the end of October, according to CoreLogic data. Many are leveraging their equity to invest in top-line renovations, which may explain higher earnings reports from top home improvement retailers like Lowe’s and Home Depot. “We’re not seeing the negative impacts of inflation,” Lowe’s CEO Marvin Ellison told CNBC. An “improve in place” mentality is growing among homeowners as the housing market slows, added Home Depot CFO Richard McPhail, who told CNBC that the company’s DIY sales are growing and contractors continue to report backlogs.
The National Association of REALTORS®’ 2022 Remodeling Impact Report offers insights into how 19 common renovation projects appeal to home buyers, as well as how much REALTORS® estimate that homeowners can recoup at resale. The report found that refinishing hardwood floors is the home improvement project with the highest ROI (147%), followed by new wood flooring (118%) and insulation upgrades (100%). Among exterior projects, new roofing and a new garage door both recovered 100% of the project costs, the report found.
The Houzz study found that many homeowners are focusing more on exterior upgrades, showing a preference for updated windows or skylights, new exterior doors, refreshed exterior paint, porches or balconies, and decks.
Houzz found that owners also are basing home improvement decisions on their home’s age and condition. After all, the nation’s housing stock is growing older: The median age of a home in the U.S. is 39, according to the National Association of Home Builders. More than half of owner-occupied homes were built before 1980; 38% were built before 1970. As homes age, they may require more upkeep. The Houzz survey found that the age-related projects homeowners are prioritizing include the electrical system (49%), plumbing (48%), heating (34%) and security (34%).