By KIMBERLEY HAAS
New data shows that 79% of Americans would rather renovate their current home than move to a different one and with $420 billion spent on remodeling projects in 2020 those in the mortgage, real estate, and building industries are taking notice.
Discover Home Loans commissioned a national survey of 1,531 homeowners. The independent survey research firm Dynata fielded the first of the online surveys in January and found that nearly four in five people would rather make improvements on their homes than move in the current housing market.
The maximum margin of sampling error was +/-3 percentage points with a 95% level of confidence.
The top five reasons given for why homeowners would rather renovate are:
-They can better personalize their home
-They view it as less expensive than buying a new home
-They feel a sense of accomplishment
-Finding a home is too stressful
-The current housing market is too limited
58% of Gen Z and Millennial homeowners are currently working on home improvements or plan to do so within the next three months. The majority, 82%, say they plan to improve their home as a form of investment.
Homeowners want to conduct routine maintenance, update appliances, or refinish their floors.
The number of Americans who plan updates to their flooring has jumped 11% since August of 2020, according to the survey.
A joint study released on Wednesday by the National Association of Realtors and the National Association of the Remodeling Industry shows the percent cost recovered from refinishing hardwood floors can be 147%.
The 2022 Remodeling Impact Report shows the cost recovery on completely new wood flooring was 118% in 2020.
The joy score for both projects was 10, according to the survey.
Jessica Lautz is the Vice President of Demographics and Behavioral Insights at the National Association of Realtors. She told The Mortgage Note that it was surprising to see such a financial leap in both flooring projects during the pandemic.
Lautz said the numbers were higher than have been seen in the past. She attributes that to wood flooring being more attractive to modern buyers and the fact that they are easier to take care of for people who have pets.
Close to one in five households acquired a cat or dog during the first year of the COVID pandemic.
Adding a new home office also ranked high on the Joy Score for Interior Projects, although it did not make the top 11 list for cost recovery on interior projects.
“I think we’ll see more changes in this moving forward while more people are working from home,” Lautz said.
Lautz said realtors, builders, homeowners, and those looking for a house can benefit from this information collected in partnership with the National Association of the Remodeling Industry.
President of NARI Chris Egner said this report is the first one to measure the impact of the pandemic on the price and relative value of various remodeling projects.
“We are glad that NARI members, who are among the most experienced remodelers, could provide realistic estimates of remodeling costs in line with the criteria specified in the survey,” Egner said in a statement.
This is also good news for lenders who have seen mortgage loan application volume falling.
Mortgage loan application volume fell by 6.3% to its lowest level since the spring of 2019, the Mortgage Bankers Association’s survey showed during the week ending April 1.
The refinance index fell 10% and was down 62% YOY. Refinances made up just 38.8% of total applications, down from 40.6%.
Rob Cook, Vice President of Marketing, Digital, and Analytics at Discover Home Loans, said this could lead people to tap their home equity for renovations.
“With tappable home equity on the rise, now is the time for homeowners to finance their home improvements with a home equity loan and ultimately, stay in the homes they love long-term,” Cook said in a statement.
Cook said with rising material costs and supply chain issues, it is more important than ever for homeowners to plan ahead for their renovations.
“The best first step is to get your financing in order,” Cook said.
Builders in the United States are also feeling the effects of Russia’s invasion of Ukraine, leading some experts to say there will be ramifications in the home and commercial markets.
Email story ideas to Editor Kimberley Haas: [email protected]