Every year when I do my annual predictions I make a prediction on home renovation activity. It is no secret to anyone who has read these predictions that I have been predicting record high renovation projects to be started and completed in the next five years. The reason for this is very simple, people are making the decision to “age in place.”
What this basically means is that many people, specifically Baby Boomers, are taking a good hard look at renovating versus selling and having to buy again. For some it is because of the rising prices and they don’t want to participate in such a fast market where they would have to pay top dollar on the buying side. Others like their location but need different space which can be accommodated by doing a renovation. And for some it is the sheer joy they believe they will get out of making something good even better.
There is no question that this trend is not going to diminish any time soon. Recently in a presentation at a Realtor University Speaker Series, D. Kermit Baker, a Senior Fellow of the Joint Center for Housing Studies at Harvard University, shared his research on the trends in home remodeling. You can view the video at the link provided below. Dr. Baker reported that he expected home improvement projects to hit an all-time high of $324 billion by the end of 2015. He reported that home improvement spending included both owned homes and rental homes. You can watch his video here:
My prediction is that as home equity continues to increase people will have more available equity to secure home improvement financing. The biggest home improvement projects are kitchen and bath remodels and system upgrades which account for about two-thirds of the total home improvement market.
Dr. Baker also noted that Baby Boomers (born 1945-1964) are the main drivers of home improvement spending and they account for about half of all the home improvement spending. Gen Xers (born 1965-1984) account for about 30 percent.
As an agent it is important to know these numbers because you will come across many sellers at your listing presentation appointments that are not just considering selling, they are also considering renovating and they have called you in to get a value on their home. Knowing what the renovation market is doing is important so you can better understand your client’s needs.
Finally, if you are wondering what Baby Boomers in particular are renovating, they want space for aging parents and for boomerang children and visiting grandchildren. The renovated homes of today are multifamily and multi-generational master pieces.