Home owners are realizing how much equity they’ve accrued, and they are looking to spend it on remodeling projects. Annual spending for home renovation projects is expected to bloom to $321 billion by the middle of the coming year, which happens to be just shy of the previous peak set in 2006 (adjusting for inflation), notes Abbe Will, research analyst in the remodeling futures program at Harvard University’s Joint Center for Housing.
Renovation Spending Near Level of 2006
The increase of home equity and low mortgage rates have played a big role in the rebound, the Joint Center for Housing notes. That is enticing owners to refinance and take cash out of their homes for renovation projects.
In the first quarter of this year, home owners accrued a total of $260 billion in additional home equity. What’s more, 38 million borrowers now have at least 20 percent equity in their homes, according to data from Black Knight Financial Services.
“I call it ‘nesting is investing,’” Brad Hunter, chief economist with HomeAdvisor, told CNBC. “People are saying I want to do something that adds to the value of my house, and I’m just going to fortify the castle.”
Kitchen and bath renovation projects are garnering the majority of those home improvement expenditures, but Hunter also notes an uptick in adding insulation. Also, more customers are showing willingness to take on multiple projects simultaneously, according to a remodeling report released this week by Houzz.
“As more home owners are enticed to list their properties, we can expect increased remodeling and repair in preparation for sales, coupled with spending by the new owners who are looking to customize their homes to fit their needs,” Chris Herbert, managing director of Harvard’s Joint Center, told CNBC.
