Millennials are delaying buying a home for numerous reasons including student loan debt, home price appreciation, and housing availability. Until new home construction offsets heightened demand, many prospective homeowners are facing inventory constraints. According to the 2016 Houzz and Home Survey, millennials and first-time homebuyers are spending more on renovations after home purchase.
The rise in renovations indicates a confident housing market. The survey reports millennials are spending an average of $26,200 on home upgrades and renovations, up 7% from 2015, and first-time homebuyers of all age groups spent $33,800, up 22% from 2015.
First-time homebuyers with limited cash reserves are conquering inventory constraints by purchasing houses that require upgrades. Houzz Principal Economist, Nino Sitchinava explained, “not surprisingly we are seeing their spend on home renovations increasing significantly in 2016 and expect the trend to continue through 2017.”
Baby boomers (aged 55 and older) are spending on renovations too. According to the survey, older homeowners spent an average of $60,400 on home renovations up from 2015’s $59,800 average. Renovations included large-scale projects, like kitchens, bathrooms, and exterior upgrades.
Sitchinava commented, “it’s a pretty strong reflection of the housing market condition. The home renovation market has mostly recovered, and is in line with the prerecession peak.” Renovation professionals are confident too. The survey reports most firms are optimistic about 2017 renovation activity, with most predicting an annual gross revenue increase of 10-12%.
Sources: Window and Door, CNBC