First-time buyers, millennials drive home-improvement spending

Dive Brief:

More than half (52%) of homeowners using Houzz plan to start or continue renovation work in 2017, with first-time buyers and millennials spending record amounts on such projects, according to the sixth-annual Houzz & Home survey. Owners will spend an average of $27,300 on renovations in the coming year, up 4% from 2016's planned spending figure.
First-time buyers who purchased a property in 2016 spent an average of $33,800 on renovations — a 22% increase from 2015. Owners in the 55-plus segment typically spend triple that of those in the millennial cohort, who spent an average of $26,200 in 2016 on such projects, 7% more than in 2015.
Owners are still spending the most on kitchens and master bathrooms, at $19,100 and $11,700, respectively, in 2016. However, spending in those categories was flat from 2015 while the average investment in living spaces, including living rooms, dining rooms and guest bedrooms, grew by 11% year-over-year.

Dive Insight:

Renovation projects are on the rise as more homeowners seek to add value to their existing homes in lieu of trading up. The Houzz report comes on the heels of a strong start to spending in Q1 2017, with the National Association of Home Builders' Remodeling Market Index rising five points from the previous quarter, supported by growth in calls for bids, committed work and project backlog.

A recent report from HomeAdvisor forecasts continued growth in home-improvement activity, finding that 80% of homeowners plan to complete such projects during the next 12 months. Owners completed more renovation and repair projects from February 2016 to February 2017 than they did for the previous year, spending roughly $1,850 more on such projects.

Millennials and baby boomers are expected to drive growth in the sector, with the former focusing their home-improvement efforts on customization and integrated technology and the latter updating their homes for ease of access.

Smart-home technology is becoming an area to watch for remodeling professionals as more homeowners expect some level of integrated technology in their properties. While 28% homeowner respondents to the Houzz survey considered such technology important to their renovations in 2016 — up three percentage points from the year before — a separate 2016 study by the company found that 45% of homeowners included or will include smart tech in a recent or future remodeling project. The average owner adds one smart product or system per renovation, Houzz found.