While the booming real estate market has received much of the attention nationally over the past few years, the home renovation market has been equally hot.
As Americans rode out the COVID-19 pandemic in their homes, many people started looking around their living spaces and saw opportunities for improvement. And as home prices soared, many buyers purchased lower-cost fixer-uppers that required significant work.
As a result, home renovation became a popular way for homeowners to upgrade their living spaces, increase the value of their homes and customize their spaces to suit their unique needs and tastes.
Renovation Spending Adds Up
The Joint Center for Housing Studies of Harvard University reported that housing remodeling and repair spending increased nearly 24% in 2020-2021. While remodeling activity is predicted to decline in 2023, the Joint Center for Housing Studies estimates the remodeling market size will be $485 billion.
It’s easy to see how the cost of those renovations start to add up to billions of dollars. A 2022 study by Houzz estimated the national median amount spent on remodeling or renovation projects was $18,000 in 2021 and new homebuyers tended to spend even more, with a median of $30,000. A 2022 survey indicated homeowners were willing to pay up to $42,000 to upgrade their homes – whether to improve its overall look, increase the amount of space or to make the home more functional.
Improving Energy Efficiency
Improving energy efficiency has been a common trend behind renovations. A U.S. News and World Report article suggested making homes more energy efficient would be a theme in 2023 home renovations, in part to reduce the cost of utility bills but also to take advantage of new tax credits and incentives.
Improving efficiency has increased development of the “smart home.” Many homeowners are investing in smart home technology as part of their renovation projects, including devices like smart thermostats, security cameras and voice assistants. According to a report by Zion Market Research, the global smart home market was valued at $86 billion in 2020 and is expected to grow to $138 billion by 2026.
Aging in Place
A report from the Administration on Aging noted that in 2020 there were 55.7 million individuals over the age of 65 in the United States. By 2040 there will be an estimated 80.8 million Americans in that age range and by 2060 the report anticipates 94.7 million will be 65 or over.
The graying population has resulted in an “aging in place” home renovation trend. Many older Americans are taking steps to modify their homes to accommodate needs related to aging. That can include things like ramps or zero-step entrances into the home, modification to bathrooms such as raised toilets or no-step shower entrances, or other renovations that can make a home safer and more comfortable for older residents.
Renovations Not Just for Homeowners
It’s important to note that homeowners aren’t the only group that can benefit from renovations. LandlordStudio suggested that renovations to rental properties can maximize returns for landlords, both by attracting and retaining high-quality tenants but also by reducing ongoing maintenance costs.
Whether it’s for comfort or practical reasons, homeowners are continuing to invest in a variety of projects to improve their living spaces. From smart home technology to outdoor living spaces, there are many trends driving this growth.
AHFC Home Renovation Loans
Thinking about a renovation project for your home or rental property? Alaska Housing provides loan options that can help make it happen. Learn more about our renovation loans or visit us at a home show in April:
- April 1-2, Anchorage Home Builders Association in Anchorage
- April 22-23, Kenai Peninsula Builders Association in Soldotna
- April 22-23, Mat-Su Home Builders Association in Wasilla