From older homeowners to millennials buying more affordable homes that need some work, remodeling is making a comeback. According to the recent “Demographic Change and Remodeling Outlook” report from the Harvard Joint Center for Housing Studies, the residential remodeling market, which includes spending on improvements and repairs by both homeowners and rental property owners, reached an all-time high of $340 billion in 2015 and is expected to increase 2 percent per year on average through 2025 after adjusting for inflation.
The baby boom generation has led home improvement spending for the past 20 years, and its influence shows no signs of waning. Older homeowners will continue to dominate the remodeling market as they make investments to age in place safely and comfortably. Expenditures by homeowners age 55 and over are expected to grow by nearly 33 percent by 2025, accounting for more than three-quarters of total gains over the decade. The share of market spending by homeowners age 55 and over is projected to reach 56 percent by 2025, up from only 31 percent in 2005.
Gen Xers are now in their prime remodeling years, and while some are still recovering from home equity losses after the housing crash, many in this generation will undertake discretionary projects deferred during the downturn. And as younger households move into homeownership, they will supplement the already thriving improvement market.
Additionally, as a new generation of homeowners enters the remodeling market, specialty niches focused on energy-efficiency, environmental sustainability, and healthy homes are likely to see significant growth. Home automation—encompassing everything from entertainment systems to home energy management, lighting, appliance control, and security—is also emerging as a strong growth market, particularly among younger households.
If you’re considering a remodeling project in your near future, keep in mind those renovations that recoup the most in value. According to Remodeling Magazine’s 2017 Cost vs. Value Report, you will see the most return on investment from the following mid-range remodels:
- Fiberglass attic insulation – 107.7 percent of cost recouped
- Entry door replacement (steel) – 90.7 percent of cost recouped
- Manufactured stone veneer – 89.4 percent of cost recouped
- Minor kitchen remodel – 80.2 percent of cost recouped
- Garage door replacement – 76.9 percent of cost recouped
For more information about today’s remodeling market, contact me today.