The time spent indoors over the past year has sparked an increase in remodeling projects to make the stay-at-home experience more comfortable. With the ongoing impact of the pandemic, this year appears to be on the same path.
Despite the economic downturn caused by the pandemic, home renovation spending rose 3% last year to $271 billion, according to a new report from Harvard University’s Joint Center for Housing Studies. For this year, JCHS forecasts spending of $281 billion.
The expected increase in home renovation spending comes on the back of the easing of lockdown restrictions and increasing signs of an economic recovery. Homeowners are using the savings from a year of lockdown (and perhaps cash freed up by refinancing) to improve the comfort of their homes.
“Many are ready to adapt their homes to their new normal lifestyles,” said Nicole Straub, general manager of Discover Home Loans. “Many have reallocated their disposable income from investments in travel and entertainment to home improvement projects.”
Fifty-eight percent of people surveyed by Discover Home Loans are planning home improvement projects this year. Of these, 83% state that making their home more comfortable is their main motivation.
40 percent of homeowners surveyed by home improvement market HomeAdvisor said adapting their home to their lifestyle was the top reason for starting a renovation project, up from 25 percent in 2019.
The mindset has changed, says Mischa Fischer, chief economist at Angi, owner of HomeAdvisor: “The home is not just this asset that I own, it is actually this place that has to perform all these services for me and consequently, I’m willing to spend money to get value for money on that front as well.”
Choosing the right renovation project
Not all home renovation projects are created equal. According to David Haas, co-founder of PowerPay, a digital lending platform that offers home renovation financing, most renovation projects will add some value to your home. Just don’t expect to get your entire investment back.
Depending on the project, according to Haas, a return on investment of between 75% and 95% can be expected. Remodeling, like replacing your exterior siding with vinyl, had a 75% return on investment, according to Remodeling Magazine’s 2020 Cost-Value Report. On the other hand, replacing a garage door yielded a 95% ROI.
According to Home Advisor’s State of Home Spending report, homeowners spent an average of about $13,000 on home renovation and maintenance projects last year.
The key to getting the most out of your investment, according to Fischer, is finding the right balance between affordability and visual impact. Your return on investment “depends on what the buyer is willing to value that change.”
Niche decorations or unique design features may work for you but may not be as appealing to a potential buyer, especially if it means spending money on a remodel if they don’t like it. In other words, having a Gothic-style house is fine if you’re the one who lives in it, but might not make the best impression on apartment seekers.
Another component of every conversion is quality. Fisher recommends that you hire a qualified remodeling professional to ensure you get the makeover you want in a timely manner. HomeAdvisor recommends reading reviews and asking for references. If you have friends or family members who have completed a similar renovation project, ask about their experiences with their contractor. Once you’ve narrowed down your list to a few potential candidates, check their licenses and ask for recent examples of their work.
“With a good professional, you get a project planner, a designer, someone who’s honest, has integrity, that’s the most important thing,” says Fisher.
The best home renovation projects for 2021
The most popular renovation trends for 2021 are projects that don’t have to cost a lot of money but can have a huge visual impact on a home’s appearance.
A bathroom renovation is the most popular planned renovation project this year, according to a HomeAdvisor poll.
Let’s face it, we spend a lot of time in our bathrooms, so an upgrade that makes this important space more comfortable, efficient, and practical makes a lot of sense and can be a selling point for any potential buyer. The change in taste will first appear in the bathroom and kitchen. Modern toilets, faucets and showerheads are not only aesthetically pleasing, but they also save water and help reduce home running costs.
According to HomeAdvisor’s True Cost Report, the average cost of a bathroom renovation last year was $13,401. You could easily spend a lot more, but a bathroom remodel is more economical than, say, a kitchen renovation, which averages more than $35,000.
According to HomeAdvisor, this was last year’s most popular project and is this year’s second most planned project. An interior painting project had an average cost of $2,007, a relatively inexpensive upgrade that can also make a noticeable impact on a home.
If you’re thinking of reselling your home, you should be careful when choosing colors. The buyer needs to be able to envision their furniture in your home, so it’s best to look for neutral tones that blend well with any style.
The same applies to the exterior paintwork. When exterior paint fails, a new paint job can set your home apart from others in the neighborhood. Just keep in mind that if you’re looking to sell your home, you might not want to paint it in your favorite baseball team’s color scheme.
Replacing your old flooring is the third most planned renovation project this year. With an average cost of $4,680, it’s relatively cheap.
Replacing worn carpet, tile, or hardwood floors with new flooring not only makes your home more comfortable, but it can also add a cool design feature that can make your home more appealing when it comes time to sell it.
Consider the latest flooring trends when replacing your old one to see what’s not only more durable but can add value to your home. According to Realtor.com, homes with hardwood floors sold 2.5% more than homes with other types of flooring in 2019 and achieved an ROI of between 70% and 80%.
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