Spending on home improvements is predicted to decline by more than $30 billion by 2024

Spending on home improvements is predicted to decline by more than $30 billion by 2024 | Image Credit: apartmenttherapy.com
Spending on home improvements is predicted to decline by more than $30 billion by 2024 | Image Credit: apartmenttherapy.com & Getty Images

Nevertheless, by year’s end, it could have peaked.

Key Points

  • It is anticipated that expenditure on home renovations would drop from $481 billion in 2023 to $450 billion in 2024.
  • The key causes of this decline include high remodeling expenses, rising loan rates, and a dearth of property sales.
  • Smaller renovation improvements that can help you make your present house more livable without going over budget are what experts advise concentrating on.

In its Q4 2023 edition of the Lead Indicator of Remodeling Activity (LIRA) report, the Joint Center for Housing Studies of Harvard University announced last week that home improvement spending would decline by more than $30 billion in 2024, but that the decline would level out by year’s end.

Home improvement spending has been steadily declining since Q3 of 2023, according to this report, which “is designed to project the annual rate of change in spending for the current quarter and subsequent four quarters and is intended to help identify future turning points in the business cycle of the home improvement and repair industry.” We advised homeowners who wish to modify their houses to concentrate on low-cost, high-impact renovations that would help make their homes more livable, based on this quarter’s findings.

The Long-Term Effects of COVID-19 on Spending on Home Renovation

The paper states that during Q1 of 2021 to Q3 of 2023, home improvement expenditure increased steadily, from $371 billion to $490 billion, when it peaked in Q3 of 2023. Spending on house renovations has seen to be steadily declining since then.

Joint Harvard University Center for Housing Studies

Nevertheless, rather than representing a real drop in spending, this dip is more of a return to what regular spending would have looked like if the epidemic had not occurred. Spending on house renovations increased quickly during the Covid-19 pandemic’s peak and the years that followed because to record-high inflation rates, a labor and material scarcity, and other factors.

Many people chose to undertake home renovation projects to create more habitable houses and ease the adjustment to staying at home all the time, but the expense of these projects was far greater than typical due to all of these considerations. That is to say, the decline in spending during the past three years is a sign of people getting back into their regular spending patterns, as the spike in spending we witnessed during COVID-19 most likely wouldn’t have happened naturally.

What Is Said by Experts?

Home improvement spending is continuing to decline due to issues other than the pandemic, according to Carlos Martín, project director of the Joint Center’s Remodeling Futures Program, who made this statement in the report:

  • High mortgage rates;
  • Difficulty in finishing home remodeling projects;
  • Absence of house sales.

Reiterating Martín’s assertion that the primary cause of the decline in expenditure at the moment is high borrowing rates is Deane Biermeier, resident Forbes Home expert and former general contractor:

According to Biermeier, “interest rates seem to be the most major driving element behind the large-project renovation slowdown.” “Yet, a lot of homeowners are still investing in minor modifications and renovations to make their houses more pleasant, even though they intend to wait out interest rates in their present residences.”

In an interview with Forbes Home, Biermeier stated that while he believes home improvement expenditure would continue to decline in 2024, by year’s end it may start to level out as mortgage interest rates start to modestly decline.

It’s unclear, according to Biermeier, if homeowners will be able to relocate or obtain equity loans to pay for significant renovations.

Is This the Right Time for a Home Renovation?

What does this entail, therefore, if you decide to take on DIY projects? Is remodeling a wise idea right now? “While now may not be a great time to take on a lot of debt to do a major renovation project, smaller projects are still popular and desirable,” Biermeier said in an interview with Forbes Home.

It might be worthwhile to take on some lower-budget renovations that can still significantly enhance the appearance and functionality of your house, particularly in this present market when high mortgage rates are encouraging many would-be purchasers to stay in their existing dwellings rather than try to acquire anything different.

Additionally, making the most of this time is by taking on these high-ROI, lower-budget initiatives right now. In this manner, your property will be prepared to sell, maybe for a greater price than if you hadn’t taken the time to make these renovations, when mortgage rates do eventually drop and many people feel more comfortable purchasing again.

5 Valuable Home Improvements That Won’t Break the Bank

You’re not alone if you’re choosing to remain in your existing house due to high borrowing rates. Many people believe that this isn’t the right moment to sell and move somewhere else, but that doesn’t mean you have to stay in your current house if it’s not providing for your family’s needs. Fortunately, you can make a number of affordable yet significant home improvements to improve the appearance and feel of your room right now.

1. Polished wood floors

Refinishing is a fantastic choice if your hardwood floors have seen better days but you don’t want to shell out the cash to replace them entirely. Although it can be difficult and time-consuming, refinishing hardwood floors doesn’t always have to be expensive. Sanding and staining included, the total cost of refinishing, when done by experts, usually runs between $3 and $8 per square foot. If you choose to do it yourself, the cost can be as low as $500 to $1,000 (not including the cost of any tools).

2. Swap Out Countertops in the Kitchen

Replacing the countertops is one of numerous modest jobs you can do to give your kitchen a brand-new appearance and feel, even if a complete makeover is out of the budget right now. With prices ranging from $5 to $30 per square foot, choosing ceramic or porcelain tile turns out to be a financially sensible option. As long as you’re ready to put in the effort for installation and maintenance, this alternative may be done yourself. Even while laminate countertops cost, on average, $25 per square foot more than other countertop materials, they come in a wide range of colors and styles, so you should be able to find something that matches your interior decor.

3. Modernize Your Kitchen Appliances

It’s not too expensive to upgrade basic kitchen appliances like stoves, dishwashers, and refrigerators. By being smart and asking the proper questions, you may save up to $1,500 on appliances, depending on the brand, the time of year you buy them, and any discounts you may receive for buying many at once. Think about requesting to purchase a floor model, and don’t forget to compare prices. Bear in mind that many stores are prepared to match prices if you discover them elsewhere for less money.

4. Shower Replacement

Do you feel that your bathroom is antiquated or boring? Change your shower to breathe fresh life into it. Prefabricated shower kits are available with all the parts needed to assemble a full shower, making them a convenient all-in-one option. These are available for less than $1,000. Are you in need of some motivation? You may design your own shower makeover with the aid of these before and after photos of walk-in showers.

5. Apply a New Paint Coat

Applying fresh paint to the exterior of your home might be a simple way to update its appearance and feel. A two-story house’s professional exterior painting usually starts at about $3,000. Depending on how big your house is and what you need, you should budget between $500 and $1,000 if you decide to do it yourself. You might choose to repaint the trim just if you’re not ready to take on the complete paint job. This substitute is less expensive and time-consuming, yet it may still significantly update the appearance of your house.

NOTE: Because exterior home painting requires working at a height on a ladder, it can be risky if not done with the right time, resources, and knowledge. Hire a professional painter to complete this task if you don’t feel secure or confident handling it yourself.

In summary

Due to rising loan rates, hefty remodeling expenses, and a fall in house sales, general home renovation spending is predicted to continue declining throughout the majority of 2024. However, by the end of the year, this trend should have peaked. Having said that, there are plenty of low-cost methods to improve the appearance and feel of your house at this time, even while it might not be the ideal time to try to relocate or embark on any large-scale, high-budget home remodeling projects.


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