The amount of money Americans spend renovating and improving their homes will grow to more than $320 billion, according to Harvard University’s Leading Indicator of Remodeling Activity.
That would put it just shy of its inflation-adjusted peak reached before the housing crash in 2006.
“A healthier housing market, with rising house prices and increased sales activity, should translate into bigger gains for remodeling this year and next year,” Chris Herbert, managing director of Harvard’s Joint Center for Housing Studies, said in a statement. “As more homeowners 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.”
The projected 8 percent growth by the start of 2017 is far higher than the historical average growth rate of 4.9 percent.
Home-improvement projects are making more sense than they have in recent years. While most renovations don’t pay off dollar-for-dollar when you sell a home, the return on investment for remodeling projects in 2016 returned an average of 64.4 percent for homes sold within a year, according to the latest cost vs. value report from Remodeling magazine.
That’s up from 62 percent in 2015, and the second-highest return since the housing crisis began, thanks in part to larger projects and rising home prices. The average project cost nearly 5 percent more this year.
A third of contractors say that more clients are purchasing high-end products for renovations in 2016 than in 2015, and a quarter said that more clients are tackling multiple projects at the same time, according to a Houzz study.