In the 1980s, people stayed in their homes for an average of five years, according to the National Association of Realtors (NAR). That number, also known as homeownership tenure, has grown over time. Now people are staying in their homes for nine years on average.
There are multiple reasons for this change in homeownership behavior. Many homeowners are unwilling to move because they locked in a low interest rate, or they essentially skipped the starter home and headed to a large home in the suburbs.
“They are living in a home and intending on living in that home for double the length of time,” said Jessica Lautz, vice president of demographics and behavioral insights at NAR. “We know that that is a big change.”
With people staying in place longer, more homeowners are remodeling and renovating their properties. Americans spend $400 billion annually on home improvements and repairs. NAR has compiled a series of reports on remodeling that looks at such things as outdoor features and even one about pet-related upgrades titled “Animal House.”
In a report released this past October, NAR looked at home-improvement projects and measured the “joy score” from owners, as well as how much the project added to the value of the home. Lautz discussed the association’s findings.
Why did NAR do this report?
This is something that I think is growing in importance. Tenure in home has risen, so people are essentially staying in their homes for longer periods of time. You have to recreate your home to be different than you originally intended a decade ago when you first moved in.
Is the overall renovation market getting bigger?
I think it’s changing in that people are remodeling homes, not just because they were fixing it up to sell, but because they’re really taking on remodeling projects because the intention of their home has changed over time.
How they’re using a bedroom or how they’re using a kitchen has changed, because kids have moved out of the home or they now have children. Something in their life has changed and they’re staying put.
How much are people spending?
It very much differs based on what the project is. So, low-dollar projects, things that you could DIY (do it yourself), perhaps a painting or an insulation upgrade, those are lower dollar. Things like converting an entire attic into a living area, that’s a high-dollar project. So, those would be vastly different prices and cost recovery as well.
Are people spending more on renovations than they have in the past?
It depends on who’s remodeling. If you are a younger millennial and are cash-strapped, you may be more willing to DIY a project and look at ways to cut costs. If you’re remodeling and you’re saying, ‘I do have a little bit of disposable income or perhaps have equity that I can tap to take on a loan,’ then people are investing.
These projects are getting done while they stay in place, not when they’re looking to sell?
They’re doing them for both [purposes]. Consumers will take on a project because they say, ‘I need to fix something before I sell my home.’ They’re aware of that and they do take on that project perhaps with the guidance of their Realtor.
At the same time, people do renovate just because they love their home. I think the remodeling trends could be driven by TV shows that people love to binge and watch. They look around their house and say, ‘You know, what if I did that? What if I took on that project?’
What else can you say that hasn’t been asked?
The thing that I think is interesting in this report is that projects where you’re the consumer, where you’re receiving the highest joy score, are not necessarily lining up with projects that you may recoup the highest value from. Things like a kitchen remodel, you’re going to have a very high joy score.
We know that projects that add a lot of value you may be extremely happy with, but it doesn’t necessarily make the highest joy score. Refinishing or putting in new hardwood floors, putting in a new roof, you’re going to be happy with that, but it’s not necessarily the highest joy score.