As the 2023 residential real estate market meanders along, with a lack of inventory being the single biggest issue for REALTORS®, there aren’t any silver linings, but there may perhaps be a copper lining, or a pewter one. A new survey shows that while people are staying put in their homes, they are doing more remodeling. So when they do eventually decide to sell, the price will be higher, often significantly.
In its report, Houzz, an online home renovation and decorating resource, found that more than three in five homeowners (61%) planned to stay in their home for 11 years or more following their renovation in 2022. And the share of homeowners undertaking renovations with a plan to sell soon declined by half since 2018 (6% this year compared with 12% in 2018).
Nearly three in five homeowners remodeled or decorated in 2022 (58% and 57%, respectively), and nearly half made repairs (48%). The median spend for home renovations in 2022 was $22,000, whereas the median for higher-budget updates (with the top 10% of spend) reached $140,000 or more. Renovation activity is continuing in 2023, with more than half of homeowners (55%) planning projects this year, with an anticipated median spend of $15,000, or $85,000 for higher-budget projects.
Kitchen and bathroom remodels remain the top projects, and command the highest median spend: $20,000 and $13,500, respectively.
As the average home age in the U.S. continues to increase, homeowners are focusing on home system improvements, according to the 2023 U.S. Houzz & Home Study. Nearly three in 10 upgraded plumbing in 2022, with electrical and home automation close behind (29%, 28% and 25%, respectively). Electrical upgrades gained four percentage points in 2022 after remaining stable at 24% for the previous two years. Among typical home system upgrades, cooling and heating systems commanded the two highest median spends in 2022 ($5,500 and $5,000, respectively), and are undertaken by more than one in five renovating homeowners.
The share of homeowners undertaking renovations with a plan to sell their home soon has steadily declined since 2018. Only 6% of renovating homeowners cited that motivation this year, while 12% did so in 2018.
Paying for the renovations also had some variations. Slightly more homeowners financed their projects with secured home loans in 2022: 16% versus 14% in 2021. Homeowners with a budget of $50,000 to $200,000 tend to rely on a secured home loan more than those with a smaller budget (26% versus 8%, respectively). Cash from savings remains the most popular funding source, tapped into by more than four in five renovating homeowners in 2022.
For the full study, click here.
