Americans are projected to spend more money on home improvements and renovations this year than at any point since the economic downturn of 2008, although we are seeing a labor shortage in the construction industry. According to the Joint Center for Housing Studies of Harvard University, “By 2013, the remodeling industry was back near $300 billion and could easily post record-level spending in 2015”.
With a strengthening economy and the steady increase in property values, home improvements have risen by almost 6 billion dollars between 2011 and 2013. Much of the improvements are related to energy efficiency and rental repairs as millennials contribute to an ever-growing rental market. However, there is a large portion of DIY renovations in the market that have helped grow the industry as a whole because of the labor shortage in the construction sector. With this, many Baby-Boomers and Millennials have taken it upon themselves to get the less labor-intensive jobs done by their own hand when it comes to their homes.
It is no surprise that the US is seeing most renovations in its larger cities. “Owners in the 50 largest metros spent an average of $3,000 on home improvements in 2013, although outlays in specific markets ranged from less than $2,000 to nearly $5,000. Spending was typically higher on the coasts, where higher home values and incomes encouraged more reinvestment in housing” according to the Joint Center for Housing Studies of Harvard University study.
Homeowners under the age of 35 are responsible for the majority of improvements made in metro areas while homeowners over the age of 65 accounted for the majority of improvements in the coastal southwest and coastal southeast regions of the country. Improvements in support of energy-efficiency were mainly focused in the Northeast, while investment in rental property renovation has increased in almost every region of the country. Millennials are proving to grow the rental market to record highs, which means that it owners are taking time to renovate their income property as rents are on the rise. For non-income property owners, it may be the right time to invest in that rental property that you have always but be aware that cap rates are hovering around 5% in the best markets. Now may prove to be the time to renovate your home in terms of sustainability in order to prepare for the future.
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