The pricey for-sale market hasn’t helped homeowners looking to move but it has prompted nearly 8 in 10 homeowners to make improvements on where they live now.
Rising Home Values = Primary Reason Homeowners Are Renovating
A newly released survey conducted by Dynata for Discover Home Loans indicated that rising home values is the primary reason nearly 8 in 10 homeowners are renovating their current homes.
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Separate though connected to rising home values is the housing market’s severe inventory shortage. Rob Cook, vice president of marketing, digital and analytics with Discover Home Loans, said in a press release, “With tappable home equity on the rise, now is the time for homeowners to finance their home improvements with a home equity loan and ultimately, stay in the homes they love long-term.”
Home Improvement Spending Predicted to Increase in 2022
Survey respondents among those planning to make home improvements this year pointed to the following reasons to renovate:
- 27% – renovating would enable them to personalize their home
- 26% – renovating would be less expensive than buying another home
- 21% – renovating would give them a sense of accomplishment
- 9% – renovating less stressful than finding a new home
- 7% – current housing market is too limited
A separate survey released in March from LightStream (part of Truist)indicated that 44% of homeowners are planning home renovation projects in 2022. This 44% is an increase from 39% in 2021.
The Joint Center for Housing Studies at Harvard University offered its findings via its most recent Leading Indicator of Remodeling Activity Report. “Strong increases in home sales activity, household incomes, and home equity levels are supporting a faster expansion of the home remodeling market over the coming year,” said Carlos Martin, project director of the Remodeling Futures Program at the Joint Center for Housing Studies.
Martin continued. “As owners continue to navigate the ups and downs of the pandemic’s trajectory, the focus on home improvements for changing wants and needs remains in sharp relief.”
Challenges Affecting Remodeling Projects
Of those planning to start a home improvement project within the next three months, 48% had experienced delays in getting materials while 41% believed those material delays will translate in extending project completion dates.
In terms of costs, among those who had already begun a project, 57% indicated their costs had already exceeded their original budget and nearly two in three indicated their project cost has increased since the initial contractor bid.
Rising interest rates have already affected survey respondents needing some sort of financing to complete their renovations. As a result, 42% of homeowners have decided to delay their improvement projects.
Paying for Home Improvements/Renovations
The share of homeowners who will finance some or all of their home renovation/improvement projects will increase in 2022 compared with 2021, according to the LightStream survey:
- In 2022, 60% to access savings; in 2021, 66% accessed savings
- In 2022, 35% to access credit cards; in 2021, 30% accessed credit cards
- In 2022, 27% to take out a home equity line of credit; in 2021, 9% accessed a HELOC
- In 2022, 21% to use a home improvement loan; in 2021, 14% used a home improvement loan
- In 2022, 17% to liquidate or tap into investment portfolio; in 2021, 8% said they liquidated or tapped into their investment portfolio.
And, by the way, Goldman Sachs is betting that 1M homeowning customers will want a $10,000 home improvement loan via its now fully acquired and integrated GreenSky’s loan systems with its $1.5T balance sheet through the rest of 2022 and possibly into 2023.
Both this new GreenSky acquisition and commitment to home improvements by Goldman Sachs push the 153-year old investment bank into new, previously unexplored territories…the home improvement loan business and the finances of ordinary Americans, according to CNBC.
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Thanks to National Mortgage News and CNBC.
