Home Renovation Spending Rises, Especially on Kitchens
Home renovation spending has grown 15% in the last year to a median $15,000, according to the tenth annual Houzz & Home survey of more than 70,000 U.S. respondents. Higher-budget projects (with the top 10% of project spending) saw an increase from $85,000 or more in 2020, compared with $80,000 in the two years prior.
Kitchen projects are the most popular among renovating homeowners, and while median spending has been flat on these 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. The study also found that the busy renovation market will continue through 2021, with 56% of homeowners renovating or 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 for 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 in 2020, the share who reported that they had wanted to pursue a home renovation all along and finally had the time increased by six percentage points in 2020 (44%versus 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). Meanwhile, 25% 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 (18%) from 2019 (16%).
“Kitchen projects are the most popular among renovating homeowners, and while median spending has been flat on these 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.”
While cash remains the leading form of payment for home renovations (83%), the share of homeowners opting to finance their projects with credit cards fell significantly to 29% (from 37% in 2019). Tax refunds gained popularity among renovating homeowners in 2020 (10%), especially when funding small projects up to $5,000.
Gen-Xers Step Up Spending
While Baby Boomers (ages 55-74) have historically led in both renovation activity and spending, Gen-Xers (ages 40-54) narrowed the gap in 2020. Median spending for Baby Boomers, who represent 52% of renovating homeowners (down from 55% in 2019), remained flat at $15,000. Gen-Xers now account for 32% of renovating homeowners (up from 30% in 2019) and increased their median spending 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 versus $82,000 to $85,000 among Gen-Xers). Median spending among Millennials (ages 25-39), who represent 12% of renovating homeowners, remained unchanged in 2020 ($10,000), with the top 10% investing $65,000.
Outdoor Projects Heat Up
While interior room remodels remain the most common projects (68%), outdoor areas have increased in popularity since 2018, with 2020 showing a jump of six percentage points (57%) among renovating homeowners. 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 and porches or 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 with 2019.
Smaller Spaces See Higher Spending
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 four percentage points (14%) and were 10% more expensive in 2020 ($1,100). Median spending on closet upgrades also saw a significant jump of 43% to $1,000.
Homes Get Smarter
Smart-home technology purchases continue to rise in popularity, with streaming-media players and TVs experiencing the greatest increases (14% and 12%, respectively) compared with 2019 (10% and 7%, respectively). A larger share of renovating homeowners purchased smart-technology products for their outdoor spaces than the previous year, including security cameras, light fixtures, and speakers or sound systems (19%, 7%, and 3%, respectively).
Homeowners Hire More Than One Professional
Nearly seven in eight homeowners hired professional help for their renovations in 2020 (87%), typically engaging more than one professional per project. Among professionals hired, specialty service providers were the most common (49%), followed by construction and design-related professionals (36% and 18%, respectively).
The annual Houzz & Home survey is the largest survey of residential remodeling, building, and decorating activity published. The survey covers a wide range of renovation projects in 2020, from interior remodels and additions to home systems, exterior upgrades, and outdoor projects. Data gathered includes historical and planned spends, professional involvement, motivations and challenges behind building, renovation and decorating projects, as well as planned activities for 2021. The 2021 study includes more than 70,000 respondents in the U.S. alone. The survey was sent to registered users of Houzz and fielded in April and May 2021, and published earlier this summer.