Dive Brief:
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Homeowners who remodel this year are estimated to spend roughly $6,148 per project, compared to $5,800 in 2016, according to a National Association of Home Builders analysis of Census Bureau data, which considered 26,000 U.S. zip codes, the number and age of homes there and their owners’ average income and education.
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Average home-improvement spending ranged from less than $2,300 to more than $22,000, with owners in areas of New York and California spending the most on such projects.
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Several zip codes that reported high remodeling spending had fewer owner-occupied homes, such as that encompassing Fisher Island, near Miami ($21,124 per project).
Dive Insight:
The results of the NAHB's analysis jive with recent data pegging growth in the remodeling sector at 2% annually through 2025. Remodeling activity started off 2017 strong, with the NAHB's latest Remodeling Market Index edging up five points in Q1. Future market indicators, including calls for bids, committed work and project backlogs, also increased significantly during the quarter.
While the Leading Indicator of Remodeling Activity from Harvard University's Joint Center for Housing Studies forecasts spending growth to decrease slightly from Q1 2017 to Q1 2018, it expects activity to remain above the long-term growth trend of 5%. Home-improvement professionals are confident about remodeling activity over the next year, with 80% of homeowners reporting plans to complete home-improvement projects in the coming months, according to HomeAdvisor's 2017 True Cost Report. Of that figure, two-thirds said they expect their home improvement spending to equal or exceed what they spent in 2016 — when remodeling spending reached a record $361 billion.
First-time buyers — many of whom are millennials — and baby boomers are set to drive home-improvement spending in the coming years as the younger segment looks to personalize and update their properties, and boomers remodel to age in place.
In addition to routine maintenance jobs, owners are looking for upgrades, including smart-home technology, built-in bars and marble countertops, according to Redfin. Outdoor work is also in demand, including updated lighting, outdoor kitchens and general landscaping to personalize a home’s exterior.
