PALO ALTO, Calif.—According to the sixth annual Houzz & Home survey of more than 100,000 respondents in the U.S., first time homebuyers and millennials are spending more than ever on home renovation projects. Investment in home renovation overall remains strong as homeowners spent $60,400 on average in 2016 on renovations—in line with 2015, which was $59,800 on average. In one of the largest increases seen this year, renovators who bought their first home in 2016 spent $33,800 on average, 22 percent more than in 2015. While millennials invested an average of $26,200 in 2016 (7 percent more than in 2015), baby boomers and older generations continue to spend roughly three times more than millennial homeowners.
Consistent with prior years’ findings, homeowners on Houzz are actively engaged in home projects, such as decorating (65 percent), renovating (60 percent) and/or repairing (53 percent) their homes. With over half of homeowners on Houzz planning to begin or continue renovations in 2017 (52 percent), this year is on track to be another boom year for home renovations. Homeowners plan to spend an average of $27,300 on home renovations in 2017, a 4 percent increase from planned spend in 2016 ($26,400). Design and functionality continue to be top priorities during home renovations.
Both first time and repeat buyers are also taking on large scope projects, remodeling 3.5 interior rooms at the same time, on average. Scope is slightly smaller for long-time homeowners (those living in their homes six or more years), who average 2.5 interior rooms during renovation and/or addition projects. Continuing to drive the renovation spending, kitchens and bathrooms are significantly more likely to be renovated than any other room. Among the more than half tackling home systems or exterior features during remodels, two systems and/or exterior projects, on average, are upgraded at a time.
First-time Buyers
The Houzz & Home survey indicates over a quarter of homeowners consider integration of smart home technology very important to their renovation (28 percent), up from 2015. Recent homebuyers are more likely to prioritize integrating smart technology during renovation projects—35 percent for first-time buyers vs. 31 percent for recent buyers and 27 percent for long-time homeowners. Integration of home automation technology also increased in 2016 relative to 2015 (21 percent vs. 29 percent, respectively). Compared to just 16 percent of long-term homeowners, 33 percent of recent homebuyers are investing in home automation installations.
Recent buyers, including first-time and repeat, are more likely to consider addressing health concerns very or extremely important—52 percent for first-time homebuyers vs. 44 percent for repeat buyers and 37 percent for long-time homeowners. First-time buyers signal that a master bedroom is a significant priority, as it is their third most frequent renovation—twice as likely to be tackled by them than by a long-term owner (29 percent vs. 13 percent, respectively).
First-time homebuyers tend to renovate homes that are smaller, on average, compared to repeat buyers or long-term owners (1,800 square feet vs. 2,600 square feet, respectively). Even looking at homes in the 1,500-1,900-square-foot range, first-time homebuyers tend to spend half the amount spent by other renovators ($23,500 vs. $46,400 repeat buyers and $44,900 long-term owners). That said first-time homeowners tend to ramp up spend the longer they live in the home; repeat homeowners tend to spend the most within the first year of ownership.
Motivated to Customize
“Finally having the time” and “finally having the financial means” continue to be the top reasons why homeowners start renovations (37 and 36 percent, respectively). Over 80 percent of recent homebuyers start a renovation out of a desire to customize a recently purchased home, while just over 1 in 10 is motivated by preparing their home for resale (12 percent). Only 1 in 5 started renovations due to recently discovered damage or deterioration in the home (20 percent).
The average investment in living spaces, according to the annual Houzz & Home survey, increased 11 percent in 2016, including living/family rooms, $5,4000; dining rooms, $2,600; and guest bedrooms, $1,900. Laundry room spend is up 24 percent, averaging $2,800, while master bedroom spend increased 23 percent, averaging $3,400. Closet remodels are the lone exception to spend increases for remodels of interior rooms with spend decreasing by 6 percent year-over-year.
Spend on kitchens and master bathrooms remained relatively flat ($19,100 for kitchens and $11,700 for master baths, averaged across a wide range of room sizes and project scopes). Roughly half of remodeled kitchens are less than 200 square feet, and the spend on these kitchens grew year-over-year. Similarly, the spend on smaller master bathrooms increased while the spend on larger master bathrooms slightly decreased year-over-year.
Project Payment
The Houzz & Home survey revealed an uptick in credit card use to pay for renovations—23 percent in 2016 vs. 21 percent in 2015. First-time buyers are nearly twice as likely to use credit cards than long-term owners (39 percent and 21 percent, respectively) and three times as likely to rely on gifts (15 percent and 5 percent, respectively). Across the board, cash remains the top payment method, with 91 percent of homeowners using this payment method for part or all of their project. Loan financing continues to be less common, with 11 percent taking out a secured bank loan to fund their projects—of those, 71 percent relied on home equity lines of credit.
The increase in credit card usage may be tied to the reported top challenge for homeowners in 2016: staying on budget (36 percent), which nearly half of first-time buyers cite as their top challenge (47 percent). Other top challenges included finding the right products and materials (32 percent) and finding the right service providers (29 percent).
Call in the Professionals
Rates of professional hiring continue to increase (87 percent in 2016 vs. 85 percent in 2015). Pro hiring is especially high among repeat homebuyers (94 percent); first-time buyers are just a likely to hire professionals as long-term homeowners (85 percent and 86 percent, respectively). Demand for project managers, full-service providers (like general contractors or design/build), architects and interior designers remained relatively stable year-over-year—these services are most popular among repeat homebuyers. The Houzz & Home survey indicates a greater need for specialty service providers, such as plumbers and painters, could be fueling the growing demand for professional help (48 percent in 2016; 44 percent in 2015).
Nearly a quarter of repeat homebuyers renovate with the help of an architect or designer (23 percent), significantly more than long-term owners or first-time buyers (16 and 13 percent, respectively). Larger project scopes among repeat buyers, such as more additions and whole house remodels, are partially driving the segments use of professionals.
Four in 5 renovating homeowners cite good reviews or recommendations as being very important when choosing service providers. This is particularly true among first-time buyers, who are also most concerned about finding the lowest-cost provider.
The sixth annual Houzz & Home survey provides insights into the home improvement activity of registered Houzz users. Data gathered includes historical and planned spends; professional involvement; motivations and challenges behind building, renovation and decorating projects as well as planned activities for 2017. Fielded in February to April 2017, the Farnsworth Group, an independent market research firm, conducted the survey.