Low interest rates and high housing costs have created a trend toward home renovations.
Eighty percent of Americans are planning a home-improvement project, and 60% completed renovations in the past six months, according to a Chase Home Lending survey of 1,000 U.S.-based homeowners, released Thursday.
Increasingly, homeowners are taking advantage of low interest rates by taking out a home equity line of credit or cash-out refinance for their renovation, in addition to using savings and credit cards, said Amy Bonitatibus, chief marketing officer of Chase Home Lending, adding that remodeling is a budget-friendly alternative to new home purchases.
“If the housing market is a little softer, then more people are going to start to look to renovate,” Drew Scott, co-host of the HGTV show “Property Brothers,” told Yahoo Finance at the Property Brothers and Chase on Sweat Equity event in New York City Thursday.
Boosting home values with ‘sweat equity’
The National Association Realtors’ (NAR) 2019 Remodeling Impact Report said Americans spend $400 billion annually on remodeling.
“While these tasks can be time consuming and costly, the projects are well worth the temporary inconveniences, ... and the final products ultimately reward us, with feelings of accomplishment, satisfaction and higher home values,” said NAR President John Smaby, in a press statement.
Of homeowners planning for a renovation, 58% planned to keep costs low, spending less than $10,000. Only a fifth planned to spend more than $25,000 on home renovation, according to the Chase survey.
“More people want to put that sweat equity in, and that’s because they’re trying to stretch budgets any way possible,” said Drew Scott.
But even among thrifty do-it-yourself (DIY) renovators, homeowners often struggle to stay in budget. They can “take the drama” out of the process by learning about and planning for costs while leaving a margin for error, said the Scott brothers.
“Stone countertops are only $30 a foot for certain kinds of stone, but they don’t realize there’s the stuff behind the walls, there’s the demolition, there’s the framing, there’s the electrical, there’s the furnace,” Drew’s brother Jonathan said. “All these things you don’t see [have costs].”
Sarah Paynter is a reporter at Yahoo Finance.