The Reno Landscape in 2018

July 16, 2018

Is 2018 the year of the home renovation?

Three different sources point to yes.

Source #1: Remodeling is expected to rise 5.1% in 2018, according to the Residential Remodeling Index. The number of remodeling projects worth at least $1,000 is expected to increase 5% this year to 12.55 million remodeling projects in 2018 that are worth a combined $194.2 Billion. The number of remodeling projects are projected to increase 2.7% in 2019.

Source #2: Homeowners are continuing to make greater investments in their homes, according to the latest Leading Indicator of Remodeling Indicator from the Joint Center for Housing Studies of Harvard University. Retail sales for building materials and the number of homeowner building permits are increasing. Homeowners are projected to spend more than $340 Billion by 2019.

Source #3: Most homeowners on Houzz, the social media platform for home remodeling and design, plan to begin or continue renovations in 2018. The recently released 2018 Houzz and Home study details U.S. renovation trends.

Why place such significance on the Houzz study? There are 40 million Houzz users, 90% of whom are homeowners. We will provide an overview of the study’s most significant findings, which includes an overview of who’s doing renovations, the spending trends and which projects are the most popular.

Reno Overview

51% of all homeowners on Houzz will either begin or continue renovations this year with the median budget set at $10,000.

Are new homeowners more prone to doing renovations? The numbers show a marked difference when looking at homeowners who renovated in 2017:

• 73% first-time home buyers renovated

• 32% repeat home buyers renovated

• 31% long-term owners renovated

Homeowners renovate for several reasons:

• 56% wanted to do it and finally have the resources

• 27% want to customize a recently bought home

• 16% to address damage

• 16% adapting to recent lifestyle changes

• 11% want to increase value to sell it

• 6% to fix damage from a natural disaster

Most renovators prefer to hire a professional rather than a DIY reno. 88% hired a professional in 2017, which is a 1% increase from 2016.

• 84% first-time home buyers hire a professional

• 94% repeat home buyers hire a professional

• 87% long-term owners hire a professional

Specialist hiring also increased. 51% of all home renovators hired one in 2017 compared to 48% in 2016. Electricians, heating/air conditioning and plumbers rank as the top 3 specialists hired.

Spending

Homeowners are more deliberate in planning for their renovations. Homeowners were 12% more likely to set a budget in 2017 compared to 2015. But setting a budget doesn’t mean that it was followed.

• 46% went over budget

• 49% stayed on budget

• 6% were under budget

There top 5 reasons why people went over budget are:

• 42% bought more expensive materials

• 41% products/services cost more than anticipated

• 31% changed the scope of the project

• 31% project was more complex than expected

• 24% discovered unexpected construction-related issues

Which household type spends the most on renovations?

• first-time home buyers $15,000

same amount as 2016

• repeat home buyers $25,000

$3,000 less than 2016

• long-term home owners $15,000

same amount as 2016

Cash or credit? How renos are funded:

• 85% with cash/savings

no change from last year’s findings

• 33% credit card

first-time home buyers use credit cards the most often

• 11% secured home loan

Most common among long-term owners

The renovation budget for each room:

• $11,000 kitchen

• $3,000 living/family room

• $2,000 master bedroom

• $1,500 laundry room

• $1,200 home office

• $1,200 dining room

• $1,000 guest/other bedroom

• $500 closet

The kitchen renovation spend saw the most dramatic increase from 2016 to 2017. There was a 10% increase, or $10,000 increase in the median budget from 2016 to 2017. Houzz attributes the increased spend to an increase on the number of larger kitchens, defined as 200 square feet or more, as driving the increase.

Popular Projects

Both average number of projects and number of home systems being updated increased in 2017.