The DIY era and eagerness to flip might be taking a bit of a turn, according to industry professionals. Although 48% of homeowners planned to decorate their homes in 2018, data shows that willingness to take on home improvement projects may be waning.
Remodeling projects can certainly add a lot of value to a home. Adding proper insulation, for example, can reduce heating and cooling costs by more than 40%, while other installments can increase property values at selling time. But even with those benefits in mind, it seems as if homeowners aren’t feeling too enthused about taking on an expansive remodel. When you consider that almost 11 million shipping containers could be converted into homes, the idea of purchasing and then renovating a property may sem burdensome. According to the Leading Indicator for Remodeling Activity from the Joint Center for Housing Studies of Harvard University, annual gains in homeowner spending on repairs and improvements is predicted to drop from the current 6.3% to less than 1% of Q2 2019.
Already, homeowners are changing the way they handle home improvement projects. According to BuildFax’s latest Housing Health Report, the volume of home maintenance projects decreased by 0.75% from last year, with home remodeling projects declining by 0.33% from the year prior. That said, spending on these two types of projects actually increased (by 6.68% and 2.47%, respectively), which indicates that the number of individual projects has increased but that homeowners are willing to spend a little bit more.
But both spending and project numbers will likely continue to decline over the next year. Chris Herbert, the managing director of the Joint Center for Housing Studies, indicated in the report that declining home sales and building activity, along with slower permitting gains, will stunt remodeling growth next year. Home remodeling rates are strongly linked with home sales, as owners will renovate prior to listing and buyers will make changes after moving in, so it’s not surprising that decreased home sales would correlate to decreased home projects. And while 809,000 construction machines were expected to be sold in 2017, fewer homes are now being built — which means both the home improvement sector and the real estate sector may experience substantial declines.
Not all is lost, however, says Herbert: “If falling mortgage interest rates continue to incentivize home sales, refinancing, and ultimately remodeling activity, the slowdown may soften some.”
It’s important to note that homeowners are still spending money on property remodeling. During 2019, it’s likely that spending in this area will total $331 billion. That figure will probably decrease to $323 billion by mid-2020 — so it’s not as if Americans will simply stop renovating. But if you plan to sell your home, you may want to limit how much you spend on remodeling; it’s possible that you may not add as much value as you think you will, particularly in a market that makes homeownership inaccessible to many.