Homeowners more deliberate in planning and budgeting for home renovations

People who renovated their home in 2017 were more likely to have a plan and budget in place before the work began, according to the seventh annual Houzz & Home survey by the home design site Houzz.

Median spending for home renovations remained steady during the year, while bathrooms and bedrooms continued to be the most popular parts of a residence targeted for an overhaul. However, an increasing number of homeowners was also looking to redo their master bathroom.

"All of the evidence from our research points to 2018 likely being another robust year for the home improvement industry," said Nino Sitchinava, principal economist at Houzz. "Recent buyers and long-term homeowners alike are keen on investing in major projects."

Houzz issued a 160-question survey to its users between March 5 and April 16. A total of 146,486 responses were collected, with the renovation report based on a subset of 130,735 American homeowners and 72,384 homeowners who renovated their primary residence in 2017.

OVERALL TRENDS

For the third year in a row, the median respondent spent $15,000 on renovations during the year. Sixty-five percent said their projects included home decorating, while 58 percent described them as including renovations and 52 percent saying repairs were involved. Only 5 percent said they built a home in 2017.

Just over half of the respondents—51 percent—said they plan to continue renovating their home in 2018. The median respondent planned to spend an additional $10,000 on such work this year.

Long-term homeowners made up the bulk of renovators in 2017, accounting for 57 percent of respondents. However, the share of respondents who are renovating their home after buying it in the same year was also on the rise, from 12.7 percent in 2016 to 13.4 percent in 2017.

Fifty-six percent said they had wanted to complete a renovation project and finally had the time or financial means to do so in 2017. Twenty-seven percent said they wanted to customize a recently purchased home, with 16 percent were seeking to update an old home or adapt the home to changes in their lifestyle.

Respondents were less likely to renovate a home in anticipation of selling it. Eleven percent said they did so, down from 12 percent in 2016 and 13 percent in 2015.

Repairing damage from a natural disaster was more common, although still infrequent overall. Six percent cited this reason, up from 4 percent in the previous two years. The survey noted how Houston had the most significant year-over-year increase in median renovation spending at 60 percent, likely a result of recovery efforts following Hurricane Harvey. Spending in Los Angeles was up 25 percent, the second most significant gain and a likely result of wildfire damages.

Seventy-seven percent of respondents said they set a budget for their project before starting. This was up from 69 percent in the previous year. However, 46 percent of respondents said they went over budget, while 49 percent came in at budget and 6 percent completed the work under budget.

Respondents were most likely to say they exceeded their budget because they bought more expensive materials (42 percent) or because materials or services were costlier than they expected (41 percent). Thirty-one percent said they spent more because they changed the project or because the project

was more complex than they anticipated, while 24 percent said the discovery of unexpected construction-related issues drove up the final bill.

The majority of respondents—85 percent—used cash or dipped into a savings account for the work. One-third relied on a credit card to help finance the renovation, while 11 percent took out a home loan.

Eighty-nine percent said they wanted to improve the home’s design, while 84 percent said they wanted to improve its functionality. Sixty-nine percent said boosting the home’s resale value was an important consideration, and most respondents who did work on their kitchen or master bathroom thought it brought their home value up. One-third of respondents who completed a kitchen renovation thought the values boost from the work was enough to offset the entire cost of the project.

POPULAR PROJECTS

Seventy-two percent of respondents remodeled interior rooms, while 64 percent upgraded home systems. Fifty-nine percent upgraded the home exterior, 53 percent completed outdoor upgrades, and 9 percent put on additions.

Kitchen upgrades remained the most popular work, with 31 percent of respondents saying they remodeled this area or included it in an addition. Twenty-seven percent did work on a guest or secondary bathroom. Master bathroom renovations edged out living room work, with 24 percent completing the former job and 23.6 percent finishing the latter.

The median homeowner spent $11,000 on a kitchen remodel, while the median bathroom remodel cost $7,000. For a major remodel, defined as involving at least the replacement of cabinets and appliances, median costs were $10,000 for small bathrooms (under 100 square feet), $16,000 for a larger bathroom, $20,000 for a small kitchen (under 200 square feet), and $30,000 for a large kitchen.

Master bathroom spending was up 33 percent, from a median of $1,500 in 2016 to $2,000 in 2017. Median spending for less popular projects generally remained steady or dropped; living room or family room renovations typically cost $3,000, unchanged from the previous year, while the median dining room renovation cost fell from $1,500 to $1,200.

Homeowners were increasingly interested in security systems, although just 15 percent included this feature in their home upgrade. However, this was up 50 percent from 2015, when just 10 percent upgraded their security system. The share of home automation systems also grew considerably in this time, from 19 percent to 23 percent.

Thirty percent of homeowners upgraded their plumbing. Twenty-seven percent overhauled their electrical system.

In exterior renovations, painting was the most common work at 23 percent. This was followed closely by renovations to windows or skylights (22 percent), exterior doors (21 percent), and roofing (21 percent).

Garden beds and borders were the most popular outdoor work completed, with 34 percent of respondents working on this feature. This was followed by lawn upgrades (24 percent), lighting work (18 percent), and deck improvements (16 percent).

PICKING A PRO

Eighty-eight percent of respondents hired a professional to do their home renovation in 2017, up from 87 percent in 2016 and 85 percent in 2015. First-time homebuyers were more likely to do work on their own, with 84 percent hiring a professional. The vast majority of repeat buyers—94 percent—called a pro.

An increasing number of respondents hired a specialist. Fifty-one percent did so in 2017, compared to 48 percent in 2016 and 44 percent in 2015.

Electricians were most in demand, with 20 percent of respondents hiring one. Nineteen percent called in an HVAC specialist, while 18 percent hired a plumber.

General contractors and construction managers were the most in-demand services, although they were not hired as often as in recent years. Thirty-six percent of respondents hired a construction manager, down from 38 percent in the previous year and 39 percent in 2015. The share of respondents hiring a general contractor fell from 30 percent in 2015 and 27 percent in 2016 to 26 percent.

Homeowners generally made few calls before deciding on a hire. The average respondent considered three general contractors or builders before making a selection, and only two architects or designers.