Survey finds boost in renovation spending among young, first-time buyers
Older homeowners continued to contribute nearly three times as much money toward renovations as their younger counterparts, according to a recent survey by the home design site Houzz. But renovation spending among younger homeowners and first-time buyers showed a much more significant increase from the previous year.
The Houzz & Home Survey is conducted each year to analyze building, remodeling, and decorating activity among homeowners. The most recent survey, fielded between February and April by market research firm The Farnsworth Group, included responses from 106,778 respondents in the United States who renovated their home in 2016.
Homeowners over the age of 55 spent an average of $73,100 on renovations, showing little change from 2015. Respondents between the ages of 35 and 54 spent an average of $53,300, up 2 percent from the previous year. The youngest homeowners, between the ages of 25 and 34, spent $26,200 – up 7 percent from 2015.
First-time buyers spent an average of $33,800 on renovations, a 22 percent increase from the previous year. By contrast, renovation spending was up only 3 percent (to $61,400) among long-term homeowners, or those who had been living in their home for six years or more. It was down 2 percent (to $74,900) among repeat buyers.
"Younger and cash-constrained first-time buyers are responding to the low inventory of affordable homes by purchasing properties that require more than just cosmetic upgrades," said Nino Sitchinava, principal economist at Houzz. "Not surprisingly, we are seeing their spending on home renovations increasing significantly in 2016 and expect this trend to continue through 2017."
Fifty-two percent of respondents said they plan to start or continue renovations this year. The average homeowner expected to spend $27,300 on renovations in 2017, a 4 percent increase from 2016.
First-time and repeat buyers were undertaking more extensive renovations, with both groups updating four rooms at a time on average. Long-term homeowners renovated an average of two-and-a-half rooms.
Kitchens and bathrooms continued to be the most popular rooms for upgrades, although spending was relatively unchanged from 2015. The typical kitchen remodel in 2016 cost $19,100, up only 1 percent from the previous year. The average bathroom remodel cost $11,700, an increase of 4 percent.
Among all other interior rooms, spending was up by an average of 11 percent. The average laundry room renovation cost $2,800, jumping 24 percent from 2015. Master bedroom remodels cost $3,400 on average, a year-over-year increase of 23 percent. Closets were the only area where spending was down, falling 6 percent to an average of $1,600.
Eight-nine percent of respondents cited improved design as a renovation priority, while 84 percent sought to improve functionality and 67 percent hoped to increase the home's resale value. Homeowners were slightly less concerned with improving energy efficiency, minimizing costs, and addressing health concerns. The last item was more of a concern to recent buyers, with 52 percent of first-time buyers and 44 percent of repeat buyers saying that addressing health concerns through renovations was extremely important.
Only 28 percent of respondents cited smart technology integration as a priority, but this share was up 3 percentage points from 2015. Twenty-one percent said they included home automation technology in their remodel, including 37 percent of first-time buyers and 35 percent of repeat buyers.
The most popular exterior renovations for 2016 included garden beds and borders (34 percent), lawn work (23 percent), exterior paint (21 percent), and windows or skylights (20 percent).
The vast majority of respondents—91 percent—financed their renovations with cash or savings. However, 23 percent also said they were using credit cards to help pay for the work – a 21 percent boost from 2015. Among the 11 percent of respondents who took out a secured loan, 71 percent said they were using a home equity line of credit.
Thirty-seven percent of respondents said they finally had the time to undertake a home remodel, while 36 percent said they finally had the finances to do the project. While only 27 percent of all respondents said they were renovating in order to customize their home, this reason was cited by 87 percent of first-time buyers and 85 percent of repeat buyers.
Thirty-six percent of respondents, including 47 percent of first-time buyers and 44 percent of repeat buyers, said staying within budget was one of their top challenges. Thirty-two percent said it was challenging to find the right products and materials, and 29 percent said it was a challenge to find the right service providers.
Eighty-seven percent said they hired a professional to do the work at their home, up from 85 percent in 2015. Forty-eight percent said they needed to hire a specialty service provider such as a plumber or painter, up from 44 percent in the previous year. Demand for general contractors, architects, and designers showed little change from 2015.
Seventy-eight percent said they were interested in finding a professional with good reviews, while 62 percent said it was important that the professional have experience related to the work they sought to do. Only 30 percent cited low cost as an important consideration, but 54 percent of first-time buyers cited this as a factor in choosing a professional.
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