Home renovation activity and spending reached the highest reported rates since 2018, according to the 11th annual Houzz & Home survey of nearly 70,000 U.S. respondents. More than half of homeowners renovated their homes in 2021 (55 percent), up from 53 percent in 2020 and 54 percent in both 2019 and 2018. After the 15 percent growth in median spending last year, homeowners are reporting a further 20 percent jump in the median renovation costs to $18,000. This growth can be attributed to homeowners with higher budget projects (the top 10 percent of spending) increasing their investment from $85,000 in 2020 to $100,000 in 2021.
Home renovation activity continues into 2022, with over half of homeowners planning to renovate (55 percent) and nearly half planning to decorate (46 percent) this year. For the first time since 2018, homeowners’ planned spending has risen to $15,000 for 2022, up from $10,000 for the past three years, a 50 percent jump. Additionally, homeowners with higher-budget renovations (the top 10 percent of expenses) plan to spend $75,000 on projects in 2022, compared to $60,000 in 2021.
“Market fundamentals, including limited and aging housing stock, continue to drive the home renovation market,” said Marine Sargsyan, Houzz staff economist. “Homeowners are clearly committed to investing in their homes despite increased product and material costs driven by supply chain disruptions, and are exploring different sources of financing. This is particularly pronounced among newer homebuyers who rely heavily on cash from previous home sales to fund their projects and spend significantly more than the national median.”
Recent homebuyers*, who accounted for 10 percent of renovating homeowners in 2021, spent nearly double the national median ($30,000), outpacing short-term** and long-term*** homeowners ($19,000 and $15,000, respectively). Recent homebuyers with higher budget projects (the top 10 percent of spending) invested $175,000 compared to $100,000 invested by short-term homeowners and $90,000 for long-term homeowners. This is likely attributed to the larger projects they undertake, averaging three to four rooms, as well as home systems such as electrical and plumbing.
The proportion of homeowners relying on cash from savings to finance their renovation projects fell by seven percentage points in 2021 (76 percent), after being stable the three years prior (83 percent each year). In contrast, homeowners who financed renovation projects with credit cards scored six percentage points (35 percent). Savings and credit cards hold their ground as the leading forms of payment regardless of home ownership. As expected, recent homebuyers and short-term homeowners were more likely to rely on cash from previous home sales (42 and 19 percent, respectively), while long-term homeowners were more likely to use secured home loans in 2021 (17 percent).
Demand is growing for home professionals
More homeowners sought help from professionals for their renovations in 2021 than the year before (89 versus 87 percent, respectively). Homeowners relied more on specialist service providers (49 percent) than other professionals for help with projects that required electrical and plumbing expertise. That said, both construction and design-related professionals were employed by a greater share of homeowners in 2021 (38 and 20 percent, respectively) compared to 2020 (36 and 18 percent, respectively). With recent homebuyers tackling more projects than their peers, it’s no surprise that they’re also the most likely to hire professional help (93 percent), compared to short-term and long-term homeowners (88 percent each).
Investments are increasing in interior premises
Average spending increased on nearly all interior space renovations in 2021. Kitchens, which remain the most popular interior space to upgrade and the space with the highest spending, saw a 25 percent increase in spending compared to 2020 (15,000 respectively USD against USD 12,000). ). Interior rooms that saw the most dramatic increase in spending included guest bathrooms (38 percent), laundry rooms (33 percent), living rooms (33 percent) and guest bedrooms (28 percent).
Securing the plot
Renovating homeowners spent a quarter more on home security systems last year. In fact, outdoor security systems are now nearly three times more popular than they were in 2015 and the second most frequently installed outdoor upgrade behind lighting (17 and 22 percent, respectively). Outdoor security system upgrades are most popular among short-term homeowners, followed by recent homebuyers and long-term homeowners (21, 20, and 14 percent, respectively).
* Recent home buyers are those who have not yet moved into their home or moved in less than a year ago.
** Short-term owners refer to homeowners who moved into their home between one and five years ago.
*** Long-term owners refer to homeowners who moved into their home six or more years ago.