With rising mortgage rates, homeowners who avoided the property market may feel they lost a chance to trade up. However, another approach feels just as new: house remodeling.
Renovations have grown increasingly appealing — and expensive — to owners of residential real estate. According to Harvard University’s Joint Center for Housing Studies, the house renovation industry might reach a record high of $430 billion by the end of 2022. (JCHS).
The home renovation market significantly expanded year over year as more people sought to improve their living conditions and modernize their homes. Consumers sought to improve the safety, comfort, and style of their living spaces.
• 7% in Q1 2021,
• 7% in Q2, 2021
• 6% in Q3, and
• 4% in Q4 2021.
Even the Joint Center for Housing Studies was surprised by the roughly double-digit increases in spending for house repairs and remodels in 2021. Wait, but how? Early in the year, they forecasted a much more moderate annual gain of 3.8% for the home renovation industry in 2021.
According to JCHS, overall homeowner expenditures for house renovations are expected to rise into the double digits in Q2 2022, climbing 15.2% year on year and reaching $400 billion for the quarter.
The home renovation industry is expected to grow 19.7% year on year to roughly $430 billion by Q3 2022, according to JCHS. These forecasts point to a strong year for the home renovation industry in 2021 and 2022, with continued growth into the future
Are consumer tastes impacting the surge in house remodels in 2022?
Yes, consumer tastes are having a major impact on the surge in house remodels for 2022
Homeowners looking to put their money into assets such as real estate amid concerns about inflation will have a harder time qualifying due to rising interest rates. Instead, they may turn to upgrades or repairs on their current residence, improving the home’s value.
According to JCHS projections, significant expenditures and market activity for home renovations will peak in Q3 2022 and then descend to more sustainable levels thereafter.
Even though Q4 2022 will begin the renovation market’s descent, the JCHS still expects 17.3% year-over-year revenue growth in this quarter, to the tune of $432 billion. These steep gains in Q4 2022 will follow Q4 2021’s already sizeable year-over-year growth of 9%.
Thus, by Q4 2022, homeowners will be paying 29% more than they did in Q4 2020, and 32% more than they did in Q4 than they did when they spent $327 billion on home renovations
