Home improvement is a long-standing tradition among many homeowners, and in the past few years it’s also been a way for some to save money as they struggled with rising mortgage rates. Despite the pandemic, many homeowners continue to invest in their homes — and a growing number are choosing projects that add both function and style to their spaces.
According to our September survey, three-fourths of homeowners who took on projects in the past two years say they were easily able to pay for the majority of them without tapping into savings, selling items, or going into debt. But with mortgage rates now above 6% and the threat of a recession, it’s no surprise that homeowners are thinking twice about how much they want to spend on home improvements this year.
While the national average is about $19,000, spending on home improvements varies based on homeowners’ ownership status. New homeowners, those who entered their homes one to five years ago, on average spent $30,000 on renovations, a figure that’s double what long-term homeowners (those who moved into their homes six or more years ago) did.
Those high homeowner spending figures are also affected by the cost of materials and labor. The prices of basic building supplies have spiked, and the shortage of contractors and skilled workers has driven up prices for labor-intensive jobs. Some experts and consumers predict that the cost of materials and labor will drive down the amount of renovations homeowners undertake this year, as they rethink plans to turn their tubs into showers or re-do their kitchens.
Still, some homeowners will likely continue to take on smaller projects that can be done in a weekend or less. For example, painting a front door, adding window box plants and replacing a worn welcome mat are all quick fixes that can boost curb appeal. And a growing trend in 2024 is to bring more of the outdoors inside with so-called biophilic design. This includes introducing natural elements like wood, greenery and stone into the living space to help improve air quality and create a more soothing environment.
For those who are looking to borrow money to finance their home improvements, there are a number of good options available today. But borrowers should always shop around to find the best rates and terms. Some lenders offer low introductory rate offers, and others are known for competitively priced fixed-rate loans.
And finally, if you’re planning to sell your house in the future, it’s important to consider what improvements will actually add value to the property. Not all renovations are created equal, and some can be overly personalized or don’t align with the style of other houses in your neighborhood. It’s also a good idea to avoid those projects that will require significant demolition, construction or excavation, since they can be costly and disruptive to the home. The return on investment for these types of projects is usually lower than that for other upgrades.