Palo Alto, Calif.—Home renovation spending has grown 15% in the last year to a median $15,000, according to the tenth annual Houzz and Home survey of more than 70,000 U.S. respondents. Higher budget projects (with the top 10% of project spend) saw an increase from $85,000 or more in 2020, compared with $80,000 in the two years prior, the survey showed. Kitchen projects are the most popular among renovating homeowners, according to the group.
While median spending has been flat on kitchen projects for the past three years, investment on major remodels of large kitchens jumped 14% to $40,000 in 2020 compared with $35,000 in 2019, according to the study. The study also found that the busy renovation market will continue in 2021, with 56% of homeowners planning to renovate this year, the highest share since 2017 (52%).
“While the pandemic caused initial concern for the residential renovation industry, many homeowners finally had the time and financial means to move forward with long-awaited projects in the past year,” said Marine Sargsyan, senior economist, Houzz. “This pent-up demand, along with other long-standing market fundamentals such as accumulated equity, will empower homeowners to continue investing in their current homes rather than face skyrocketing prices in the housing market.”
With homeowners homebound due to the pandemic, the share who reported they had wanted to pursue a home renovation all along increased by 6% in 2020 (44% vs. 38% in 2019), and remains the top renovation trigger. Wanting to do it all along and finally having the financial means also rose (as reported by 36% of homeowners compared with 34% in 2019), according to the survey. Twenty five percent of homeowners claimed to have renovated instead of moving to find a home that fit their needs because it was the more affordable option. Surprisingly, remodeling to adapt to recent changes in lifestyle only increased by two percentage points in 2020 from 2019 (18% vs. 16% in 2019).
While cash remains the leading form of payment for home renovation spending (83%), the survey showed the share of homeowners opting to finance their projects with credit cards fell significantly to 29% (from 37% in 2019). Houzz said tax refunds gained popularity among renovating homeowners in 2020 (10%), especially when funding small projects up to $5,000.
Gen x’ers step up spend
While baby boomers (ages 55-74) have historically led in both renovation activity and spend, gen x’ers (ages 40-54) narrowed the gap in 2020, according to the survey. Median spend for baby boomers, who represent 52% of renovating homeowners (down from 55% in 2019), remained flat at $15,000, according to the survey. Gen x’ers now account for 32% of renovating homeowners (up from 30% in 2019), the survey showed, and increased their median spend to $14,000 (from $12,000 in 2019). That said, the top 10% of both generations increased their investment in 2020, but baby boomers did so at a more significant rate (from $80,000 to $90,000 vs. $82,000 to $85,000 among gen x’ers), the survey showed. Median spend among millennials (ages 25-39), who represent 12% of renovating homeowners, remained unchanged in 2020 ($10,000), with the top 10% investing $65,000, according to the survey.
Outdoor projects heat up
While interior room remodels remain the most common projects (68%), outdoor areas have increased in popularity by 6% since 2018, with 2020 showing 57% among renovating homeowners, according to the survey. Improvements to outdoor spaces were directed toward the grounds with beds or borders and lawns seeing significant growth in popularity (35% and 20%, respectively). Exterior upgrades, such as decks, porches and balconies also increased in popularity in 2020 (14% and 12%, respectively), with homeowners investing 25% more in deck and porch upgrades ($2,500 and $1,500, respectively) compared to 2019.
Smaller spaces see higher spend
Homeowners are investing in smaller areas that may once have been considered a luxury and are now a necessity. Demand for home office projects jumped by 4% and were 10% more expensive in 2020 ($1,100), according to the survey. Median spend on closet upgrades also saw a significant jump of 43% to $1,000, the survey showed.
Homeowners hire more than one pro for help
Nearly seven in eight homeowners hired professional help for their renovations in 2020 (87%), typically engaging more than one professional per project, according to the survey. Among professionals hired, specialty service providers were the most common (49%), followed by construction and design-related professionals (36% and 18%, respectively).