Home renovation activity and spending hit the highest rates reported since 2018, according to Houzz & Home’s 11th annual survey of nearly 70,000 U.S. respondents. More than half of homeowners renovated their home in 2021 (55%), compared to 53% in 2020 and 54% in 2019 and 2018. Following last year’s 15% growth in median spending, homeowners are reporting a further increase 20% of median expenditure. renovation expenses at $18,000. This growth can be attributed to owners having higher budget projects (top 10% spend) increasing their investment from $85,000 in 2020 to $100,000 in 2021.
Home renovation activity continues in 2022, with more than half of homeowners planning to renovate (55%) and almost half planning to decorate (46%) this year. For the first time since 2018, projected homeowner spending rose to $15,000 for 2022 from $10,000 in the past three years, a 50% jump. Additionally, homeowners with higher budget renovations (top 10% of spend) plan to spend $75,000 on projects in 2022, compared to $60,000 in 2021.
“Market fundamentals, including a limited and aging housing stock, continue to propel the home improvement market,” said Marine Sargsyan, economist at Houzz. “Homeowners are clearly committed to investing in their homes despite high product and material costs driven by supply chain disruptions, and are exploring various sources of financing. This is especially pronounced among recent buyers, who rely heavily on money from previous home sales to finance their plans and spend significantly more than the national median.
Recent buyers, who made up 10% of homeowners renovating in 2021, spent nearly double the national median ($30,000), outpacing short-term and long-term homeowners ($19,000 and $15,000, respectively). Recent buyers with higher budget projects (highest 10% of spend) invested $175,000, compared to $100,000 invested by short-term owners and $90,000 by long-term owners. This is likely attributed to the larger projects they undertake, which average three to four rooms, as well as household systems, such as electrical and plumbing.
The share of homeowners relying on cash from their savings to finance their renovation projects fell by seven percentage points in 2021 (76%), after remaining stable for the previous three years (83%, each year). In contrast, homeowners financing renovation projects with credit cards gained six percentage points (35%). Savings and credit cards remain the main forms of payment, regardless of housing tenure. As expected, recent buyers and short-term owners were more likely to rely on cash from previous home sales (42% and 19%, respectively), while long-term owners were more likely to use guaranteed real estate loans in 2021 (17%).
Demand is growing for home professionals
More homeowners sought professional help with their renovations in 2021 than the previous year (89 vs. 87%, respectively). Homeowners relied more on specialized service providers (49%) than on other professionals for help with projects requiring electrical and plumbing expertise. That said, construction and design professionals were hired by a greater proportion of owners in 2021 (38% and 20%, respectively) compared to 2020 (36% and 18%, respectively). With recent buyers tackling more projects than their peers, it’s no surprise they’re also the most likely to hire professional help (93%), compared to short-term and long-term homeowners term (88% each).
Investment increases in interior parts
Median spend increased across nearly all interior room renovations in 2021. Kitchens, which remain the most popular interior room to upgrade and the room that commands the most spend, saw their spend increase by 25% compared to 2020 ($15,000 vs. $12,000, respectively). ). Interior rooms that have seen the most dramatic increase in spending include guest bathrooms (38%), laundry rooms (33%), living rooms (33%) and guest bedrooms (28%) .
Securing the grounds
Last year, homeowners renovating spent a quarter more on security systems. In fact, exterior security systems are now nearly three times more popular than they were in 2015 and the second most frequently installed exterior enhancement behind lighting (17 and 22 percent, respectively). Exterior security system upgrades are most popular among short-term owners, followed by recent buyers and long-term owners (21%, 20% and 14%, respectively).