Palo Alto, — The fifth annual Houzz & Home survey (featuring more than 120,000 respondents in the U.S.) shows that homeowners are investing larger budgets into their kitchen and bathroom renovation projects. The average spend on kitchen and master bath remodeling projects in 2016 increased by 12 percent year over year. Consistent with the last five years, kitchens remain the most popular interior remodeling project (31 percent), followed by master/non-master bathrooms (22 and 26 percent, respectively) and living/family rooms (23 percent). A more diverse set of projects were tackled in 2015 than in 2014, with a greater emphasis on upgrades to interior spaces (72 percent in 2015; 69 percent in 2014) and exterior features like windows and roofing (56 percent in 2015; 53 percent in 2014).
When it comes to the motivations behind renovations, “finally having the time” was the top trigger for home renovation projects in 2015 (38 percent), ahead of “finally having the financial means” (37 percent), which was the top trigger for 2014 projects. Homeowners are renovating instead of buying a “perfect” home largely due to a desire to stay in their current home or lot (49 percent) or remain in their current neighborhood (31 percent). Financial considerations, such as renovations being a more affordable option or providing a better return on investment (28 percent each) trail behind.
Recent Home Buyers — A Key Driver of Renovation Activity
Over a quarter of renovations are driven by recent home purchases (26 percent), and more than one in 10 renovators purchased a home in 2015 (12 percent). Renovators of a recently purchased home invest more in their projects than other homeowners ($66,600 versus $59,800). They also embark on larger scope projects and are nearly three times as likely to renovate all of their interior spaces than the average renovator (14 percent versus 5 percent). When considering priorities, kitchen projects top the list of these homeowners (41 percent versus 31 percent for the average renovating homeowner) along with other major projects to improve the comfort of their home such as home automation (33 percent versus 19 percent). People tend to buy a home with the intention of renovating versus seeking an already “perfect” home with the goal of creating a personalized space (34 percent), capitalizing on the affordability of renovating versus buying (32 percent) or maximizing their return on investment (32 percent).
Those preparing to sell their home (13 percent of renovators) are also investing in renovations, focusing on exterior projects that enhance curb appeal. Popular projects include upgrades to exterior paint, roofing, exterior doors and decks (27, 20, 19 and 17 percent, respectively). Homeowners preparing their home for sale spend just over half the amount that recent home buyers invest in their projects ($36,300 versus $66,600), prioritizing immediate return on investment and rapid sale.
“2015 was another strong year for the home renovation market, with homeowners continuing to increase investment in their homes,” says Nino Sitchinava, principal economist at Houzz. “While the majority of renovations are spurred by homeowners’ desire to upgrade a home they have lived in for some time, recent home purchases are also an important driver of home renovation activity. Recent home buyers tend to do more, spend more and are more likely to hire professionals to help with their renovation projects than other homeowners. As the churn in the housing market picks up in the near future, the home renovation market should see meaningful growth.”
Budget? What Budget?
Nearly one-third of homeowners take on a remodeling project without setting a budget, and the same share exceed their established budget (31 percent each). Homeowners who exceed their budgets spend considerably more on their projects ($83,400 average spend) than those who stayed on budget ($52,300). Surprisingly, those who did not set an initial budget spent less on average than those who stayed on budget ($44,100). Renovators of a recently purchased home are significantly less likely to embark on a project without a budget (24 percent), yet are more likely to exceed an established budget (40 percent). The decision to opt for more upscale products and materials was the top budget buster (45 percent), ahead of products/services being more costly than expected (40 percent) and the decision to change the project scope/design (33 percent), further signaling a higher level of consumer confidence.
Motivated Millenials
Millenial homeowners continue to be just as active as other age groups when it comes to remodeling their homes (61 percent for Millenials and other age groups alike). However, Baby Boomers and others over the age of 55 spend three times more on renovations than Millenials ($73,300 versus $24,500, respectively). While one in five renovating homeowners upgrades or installs a home automation system (19 percent), Millenial homeowners (26 percent) and recent home buyers (33 percent) are even more avid about home technology.
A Helping Hand
More than four in five homeowners renovated their homes with professional help in 2015 (85 percent), a percentage consistent with Houzz’s 2014 findings. Baby Boomers and recent home buyers are more likely than any other groups to hire professional help (88 percent and 91 percent respectively). Among those homeowners who hire a professional for their renovations, nearly half hire a professional such as a general contractor, builder or kitchen or bath remodeler, or a design-build company (46 percent). One-fifth hire a design professional such as an architect, interior designer, or kitchen or bath designer. Recent home buyers are particularly keen on hiring those professionals.
The full U.S. Houzz & Home Survey is available here. The Farnsworth Group, an independent market research firm, conducted the study. Registered users of Houzz received the survey, and it was fielded from March to June 2016.