Ignore the Rumors: What’s Really Going On With Home Improvement This Year?
Will looming recession fears push millennials even further away from purchasing their dream homes? Thankfully, probably not. One CNBC report states that 92% of millennial homebuyers say current inflation rates have impacted their home-buying plans; however, these fears don’t seem to change their minds about buying a house. Instead, many are opting to shift more of their savings toward a home fund. Some homebuyers are even working around the problem by purchasing older homes and making home improvement fixes themselves. In fact, Builder Online reported that millennials are more likely to undertake home remodeling and even spend more doing so compared to other generations.
Currently, millennials make up the largest group of home buyers in the US housing market—accounting for about 37% of the total home purchase market in 2021. More specifically, older millennials (those born between 1980 and 1989) owned 23% of homes while younger millennials (those born between 1990 and 1998) owned 14%.
Sadly, the Covid-19 pandemic threw a wrench in the millennial drive toward homeownership. Thanks to remote work, families living in the city wanted to move to bigger, more spacious homes in the suburbs. The flood of stimulus money during the first two years of the pandemic also encouraged many Americans to buy a new house even if they already owned one.
As a result, the housing market hit record highs in 2022. However, an absence of available units matched by rising interest rates tempered the demand for new houses. Families that wanted to adapt to our new normal in a new home had to make do with home improvement instead.
To save on the cost of buying a house, many millennials also had to resort to buying fixer-uppers. These are older houses that require additional home improvement or repair jobs to make them habitable again. Given the cost of a brand-new home—as well as higher interest rates—buying fixer-upper homes are often the only way millennials can afford to get a home of their own.
The Threat of a Looming Recession
Experts have been predicting a pending global economic recession for the better part of a year now. The current spate of growing inflation coupled with slower economic activity is threatening to derail economic growth as a whole. To counter this fluctuation, many central banks (including the US Federal Reserve) have begun raising interest rates to ease inflation. However, these efforts have caused some unintended consequences—including blips in the housing market.
Before the pandemic, many millennials took advantage of low-interest housing loans and easy payment terms to buy their dream homes. When the Fed began raising overnight borrowing rates, many were forced to reconsider their purchase plans. Those unable to cash in on pre-inflation home deals had to make do with some good old-fashioned home improvement projects.
Home Buying vs. Home Improvement
Employment rates have remained high despite inflationary woes and the possibility of a 2023 recession. Consumer confidence—which usually plummets in the face of high inflation rates—has also remained high. This includes a rising trend among homeowners to engage in home improvement projects, rather than buying new houses.
Harvard University’s Joint Center for Housing Studies report predicted a 10.2% increase in home improvement and maintenance spending for 2023. Even as many homebuyers took advantage of pre-pandemic interest rates, the market soon ran out of available homes to sell, leaving many buyers with cash burning a hole in their pockets. Soon, the Federal Reserve began raising interest rates to temper inflation. This led to many households holding off from buying a new home altogether, as it just doesn’t make fiscal sense to buy knowing prices will go down soon. So they focused their attention and budget on home improvement projects instead.
In addition, many homeowners with existing mortgages managed to lock these deals in before the Fed decided to raise interest rates. This means that they still enjoy making monthly payments based on previous market interest rates. For them, it makes sense to use whatever extra money they generated to dress up their homes.
Why Home Improvement is Better than Buying A New House
An overwhelming 76% of Americans would rather use their savings on home improvement projects than on a downpayment for a new house. As such, those faced with skyrocketing prices, higher interest rates and the hassles of moving in and out of homes are looking for renovation and home improvement projects to get more value from the ones they already own.
Meanwhile, some buyers resorted to purchasing older, more affordable homes to rehab. Granted, buying a new home, overseeing its construction and moving in presents its own sets of problems. As it stands, a typical home improvement project presents fewer inconveniences.
Let’s look at why, for many families, home improvement makes for a better option.
It’s Cheaper to Renovate than to Start from Scratch
Repairing or improving a section or adding a new room will always be cheaper than building a brand-new house. The comparison is much more dramatic when you reduce the numbers based on a per-square-foot basis.
According to Forbes, the average house costs around $150/sq ft to build, though can balloon as high as $500/sq ft depending on your materials. In addition, consider the costs of architectural designs and blueprints, local government permits and fees, and new utility applications.
In contrast, a typical renovation job can average around $100 sq/ft. For owners who want to add a new room or improve a section, it’s cheaper to retrofit an existing home to fit evolving tastes. This is especially true if you already have the land to accommodate the changes.
Property Values Can Increase with Certain Home Improvements
Depending on the home improvement projects, some renovations can actually help increase the value of a residence. Typical home improvement projects such as remodeling kitchens or bathrooms, adding decks or balconies, and improving the basement or attic usually serve to increase space or improve function. This can eventually help command a higher price if the owner eventually decides to sell.
Home Improvement Increases Emotional Attachments
The longer you spend somewhere, the more memories you’ll make there and the greater attachment you’ll feel to it. No one can appreciate DIY renovations more than the people who did them.
Renovations Help Avoid the Hassle of Moving and Starting Over
Moving between homes comes at a cost. Aside from the cost of buying a new house, owners will need to pony up for moving expenses; then there’s also the hassle of starting over in a new community—looking for new favorite stores, meeting new neighbors and establishing an identity. For many people, the cost of moving and establishing new roots can be too much of a burden. In many cases, home renovations are more than enough to address the need for change.
When Is Buying a House Preferable Over Making Home Improvements?
The easiest way to decide between undertaking home improvements and buying a house is by comparing the costs. If you can comfortably afford to buy a new property without selling the old one, then by all means go for it. However, when buying a new home requires selling the existing one, you can expect a lot more questions to crop up.
Here are some of the additional factors to consider before signing on the dotted line:
- Is my current residence large enough to support my growing family? If not, is it possible to renovate or add square footage?
- What’s the current state of the housing market? Is the market saturated enough to score a good deal?
- Can I afford current interest rates and other additional costs, both foreseeable or not?
- Have I considered the financial costs of moving further away? At the same time, is my family prepared for the social costs of uprooting?
- Can I afford the time and resources needed to move from one house to another?
- Am I looking for a new environment or do I actually just want more space?
These questions are intentionally thought-provoking. You’re looking at dropping hundreds of thousands of dollars, after all—you’ve got to know your whys to get where you need to go.
Interesting Trends in Home Improvement
Home improvement projects offer an affordable and cost-effective alternative for homeowners unable to afford a new house. These projects range from full-scale renovations to simple changes in furniture, fixtures and other design elements.
Let’s take a look at some of the most popular home improvement trends in 2023.
The current trend of homeowners undertaking home renovations themselves began during the initial wave of COVID shutdowns. With many employees staying home to work remotely, the lack of overtime and commute left many with an abundance of free hours. This led many homeowners to start paying attention to their homes. Flush with stimulus check cash and time on their hands, people started undertaking DIY projects at home.
With many employees still opting to work from home, the DIY trend continues to generate interest among homeowners. Renovating the home to accommodate a small office home office (SOHO) setup is among the hottest home improvement trends today. Overall, DIY numbers this year are set to surpass numbers during pre-pandemic levels. It helped that 2023 also saw home values drop even as interest rates went higher.
Goodbye Open Floor Plans?
Improvements in early 20th-century construction material technology led to more efficient, load-bearing walls and structures. This allowed engineers and architects to freely experiment with floor layouts that required fewer inner walls to support the entire structure—and so the open floor plan was born. Kitchens merged with dining areas without the need for walls in between; living spaces became wider and more spacious without the presence of restrictive columns and pillars. Open floor plans pushed design toward modern, utilitarian designs that let in air and light.
According to real estate and design professional Isabella Loretta Janke, the COVID pandemic slowed down the open floor movement. Due to the shutdowns, workers were given the option to work from home. As a result, many remodeled their homes to incorporate smaller, secluded areas, mimicking their office cubicles and workspaces. Families that suddenly found themselves bound together for days on end longed for individual spaces for private moments.
Moreover, larger open spaces require more energy to heat and cool than compartmentalized rooms. The spike in energy costs beginning in 2020 has many homeowners reconsidering the need for high ceilings and spacious areas.
As IoT technology asserts itself in all aspects of our lives, incorporating smart equipment into the home (think WiFi-powered appliances that give owners remote control access) has become increasingly popular. Smart home technology also includes many energy-saving devices and equipment that help reduce energy consumption and enhance the daily home experience. Whether it’s because they provide an environmental-friendly approach to homes or simply because it’s cool to have these features, smart home technologies are quickly becoming standard in many new homes.
Smart Lighting and Heat
Who would have thought that the future would entail internet-powered light bulbs? Smart lighting allows owners to remotely control their home’s entire series of light bulbs via the use of their smartphone or voice commands. Modern smart lighting also means the ability to brighten or dim any bulb as needed as well as setting up specific times they automatically turn on or off. Similarly, users can use their smartphones to turn up the heat or the air conditioner even as they’re still on the way home. With the right timing, the homeowner can arrive exactly at the moment the entire house achieves the requested room temperature.
Aptly named, the smart kitchen concept requires a smart refrigerator connected to the Internet. Internal sensors can detect which items in the refrigerator are close to running out. The owner can program the smart kitchen system to automatically order from a listed online grocer any refrigerator item about to run out. The smart kitchen can also include coffee makers that automatically brew a fresh pot every morning or digital dishwashers that start cleaning at the time same time every night.
Hooking up the smart TV to your other entertainment devices such as game consoles, speakers, VR devices and others is now part of the smart home system. Using their smartphone, owners can choose to play selected music that can follow them from room to room. When set up with smart lighting solutions, users can also play colors that reflect certain moods that are perfect for every occasion.
Finally, smart security ties it all together and helps homeowners monitor their smart homes and check for any problems while they’re away. Remote security allows owners to automatically lock unattended doors, turn off idle appliances and connect with law enforcement officials during emergencies. The owner will only need to check their smartphone via the remote security application to remotely check the house or administer commands.
Use of Sustainable Materials
Another trend gaining traction is the use of sustainable materials when making home improvements. These materials help make homes more energy-efficient and less dependent on non-renewable energies like fossil fuels. It also encourages the use of environmentally-friendly and long-lasting materials for everyday use.
A primary component of a sustainable home involves supplementing energy consumption by adding solar panels to help with electricity and heating costs. With solar panel prices continuing to drop, providing a sustainable, alternative form of energy can reduce the dependence on power plants that run on coal or fossil fuel. Sustainable materials usage also means using longer-lasting LED light bulbs instead of traditional incandescent bulbs, less use of oil-based plastics and more recyclable materials. A specific example of the use of sustainable materials is the use of sustainable linen made from bamboo for household materials from curtains to tablecloths to bedsheets.
The trend toward the use of sustainable use stems from increased concerns about global warming. Believe it or not, 2022 earned itself the title of the fifth warmest year on record. Sadly, the prognosis for the next five years is just as bleak. Scientists warn that global temperatures might hit record highs beginning in 2023. This dire scenario is creating very valid concern among millennials and Gen Zers poised to inherit an increasingly uninhabitable Earth.
More Curves and Earth Tones
On a more superficial front, curved or circular furniture is in and angular furniture is out. This stems from the current design obsession with nature-inspired objects that feature contoured, curved shapes.
The use of natural inspiration coincides nicely with another growing trend: warmer color tones in homes. That’s right, earthy shades such as brown, white, beige, terracotta, green and amber are making a comeback.
Rather than implementing design trends that contradict nature, warmer tones and softer shapes work to complement it. Organic, fluid and natural!
Maximizing Outdoor Space
Another trend inspired by the pandemic is the use of outdoor space for added experiences. The shutdowns forced many families to stay together at home. This made them more willing and available for communal activities such as backyard meals, playing, or just hanging out. As a result, families began turning their bare lawns into something more useful. This includes installing a barbeque grill and picnic tables, installing a deck or porch, putting swing sets or slides for kids, and other family activities. Even now when adults are back at work while kids are back in school, the outdoor space has changed for the better. For the moment there’s no turning back.
Home Improvement Focus on Bath and Kitchen Spaces
Two rooms that many homeowners have been paying extra attention to lately are the kitchen and bathroom. During the pandemic shutdowns, parents working from home and kids learning online started spending a lot more time exploring the house. As such, kitchens and bathrooms got a lot more popular when families went from spending half of their time at home to all of it. This inspired many households to make changes and additions. Families transformed kitchens from mere meal-prepping stations to social environments. Meanwhile, bathrooms have become a real sanctuary for those confined to the same four walls for months on end. As a result, homeowners are now adding more elements to make their bathroom time more soothing and enjoyable.
Showing Home Improvement Trends Is Easy With the Right Presentation Software
It pays to paint a vivid picture of what could be when offering clients home improvement options. And for that, you’ve got to engage them visually to engage them emotionally. First, you need to show the room in its current state. Making this step interactive frees your client to explore it and the proposed new look with the click of a button. Even better, you can offer clients multiple options such as different colors, additional furniture or alternate designs. All they have to do is click on an option to see it come to life right before their eyes.
Creating interactive home improvement magic requires the use of interactive software—like Ingage. This cloud software allows you and your team to collaborate and create highly interactive presentations incorporating images, video and audio. Applying interactivity means that your client can use simple mouse controls to preview proposed designs, view variations and navigate freely within the presentation.
Best of all, Ingage tracks your clients’ reactions through analytics. Measuring how much time they spent on each section and how many times they revisited an area tells you which parts engaged them and which ones need more work.
Don’t just take our word for it, though. Visit us at Ingage! We’d love to arrange a short demonstration to help your team show your clients what they’ve been missing.