Home Renovations Skyrocket

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According to a report in the Wall Street Journal low inventories of homes for sale in combination with continuing high home prices is pushing Americans to spend a record amount in home remodeling. In fact, Harvard University’s Joint Center for Housing Studies estimates that homeowners will spend $316 billion on home remodeling in 2017, up considerably from the $296 billion spend in 2016.

The report points out that most homeowners are using home equity or savings to pay for these renovations, a sign that they remain confident about investing in their homes.

However, analysts point out that when adjusted for inflation the amount spent in 2017 is signficantly lower than the $344 billion spent in 2006.

Renovating and Selling or Renovating and Staying

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As we’ve mentioned recently – see More Equity = More Remodeling the current improvement in the economy and overall consumer confidence has led more homeowners to consider remodeling and renovations. For many, the next is “Now what? Do I remodel and sell or remodel and stay?”

Of course, each situation is unique but some general considerations might include:

Renovate and sell

  • Your family needs have changed. This is probably the biggest reason for selling and moving: either you need more space or it’s time to downsize.
  • The neighborhood no longer fits your needs. Perhaps you need a neighborhood that’s more kid-friendly or has better schools. Or maybe these are no longer prime considerations.
  • Affordability. Have local costs become too expensive?

Renovate and stay

  • You love your home. If your current home and/or location is ideal, why change? Make the necessary changes as needed and continue to enjoy your situation.
  • The cost of selling and moving. While your current home has no doubt appreciated in value, so has everything else so it all becomes relative. Add in the costs of selling and then moving and it may just make more sense to stay put.

And, of course, situations change and while it may not be the time to sell now who can tell what will happen done the road?

More Equity = More Remodeling

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As more and more homeowners see their equity increasing, many are turning that money into remodeling. The Joint Center for Housing Studies of Harvard University said its Leading Indicator of Remodeling Activity projects that home remodeling spending will increase by 8.6 percent by the close off 2016 and continue to accelerate to 9.7 percent by the first quarter of 2017.

Analysts estimate that money for remodeling and repairs could climb as high as $325 billion by early 2017.

Bathroom and kitchen remodels remain the most common renovations but whole house remodels and smaller scale additions are gaining traction as homeowners look to add space.