Spending Surge Hints at Solid 2019
PALO ALTO, CA — Spending for kitchen remodels, the most popular room to renovate, jumped 27% last year, amidst signs that 2019 should spell another positive year for residential renovation even in the face of rising prices wrought largely by tariffs on imported products.
That’s the key conclusion of the eighth annual “Houzz & Home Survey,” a major study of residential remodeling, building and decorating activity conducted by Houzz, the Palo Alto, CA-based online platform for home renovation and design. Houzz’s 2019 study, conducted among more than 140,000 U.S. respondents, covered a wide range of renovation projects in 2018, from interior remodels and additions to home systems, exterior upgrades and outdoor projects.
According to the survey, whose findings were released in June, residential-remodeling activity remained strong through 2018, with more than half (54%) of the homeowners surveyed by Houzz undertaking some form of renovation, at a median spend of $15,000.
While kitchens led last year’s spending surge, the median spend on guest and master bathroom remodels – the second and third most popular rooms to renovate – grew by 17% and 14%, respectively, Houzz said.
“Last year’s 10% increase in tariffs on imported building materials is likely one of several forces hitting consumer pockets in areas such as kitchen and bathroom remodels that are heavily dependent on imports of cabinetry, countertops, ceramic tile, plumbing fixtures and vinyl flooring from China,” said Nino Sitchinava, principal economist for Houzz.
Sitchinava said Houzz expects a similar impact in kitchen prices this year, given the current status of U.S.-China trade negotiations (see related story).
Despite the anticipated price increases, however, Sitchinava observed that 2019 “is on track to be another robust year for the home improvement market, with 51% of surveyed homeowners planning to continue or begin renovations this year, Houzz reported.
According to Houzz’s latest survey, the top two considerations for renovating is a desire for homeowners (61%) to stay in their current home (for owners who’ve lived in their homes for six years or more), while personalization (56%) is the most important factor for those who’ve lived in their homes for less than one year.
“Pent-up demand continues to be the biggest trigger for renovations today, as older generations, who represent four in five renovating homeowners, prefer to stay put and invest in the design and functionality of their current home rather than moving to a different home,” Sitchinava said.
Baby Boomers (ages 55-74) and Gen Xers (ages 40-54) combined represent four of five renovating homeowners (81%), with a median spend of $15,000 each. Meanwhile, Millennial homeowners (ages 25-39) represent 14% of renovators, with a median spend of $10,000. Gen Zers (ages 18-24) entered the renovation market in 2018, accounting for a small share of renovating homeowners (0.3%) at a median spend of $7,000, according to Houzz.
Other findings from the latest Houzz survey were as follows:
The majority of homeowners pay for renovations using cash from savings, although the share of homeowners paying for renovations with a credit card continued to rise (37% in 2018 vs. 33% in 2017). Reliance on credit cards and gifts or inheritance as funding sources is higher in younger generations (under 40), while secured home loans and past home sale proceeds are key for homeowners 40 and older.
Renovating homeowners experience a range of challenges during their renovation projects. By far, the greatest three challenges are finding help, finding products and staying on budget (see related graph above).
Security upgrades continue to gain in popularity, with an average annual growth of 20% over the past three years. Outdoor security also saw gains in popularity, growing to 12% in 2018, from 9% in 2017. One in seven renovating homeowners (14%) integrated smart outdoor security cameras that can be monitored or controlled from a mobile device. Home security is particularly popular among Millennials, who are more likely to upgrade their security systems during renovations than Baby Boomers (24% vs. 15%, respectively). ▪