The Home Improvement Boom Is Fading
Home improvement is the alteration, renovation, repair or replacement of part or all of the interior or exterior of a residential building. It also includes the addition of an accessory or the modification of an existing structure to accommodate a change in use, e.g. converting a garage into a living space. It may also include outdoor improvements such as landscaping or constructing a deck or patio.
Despite the COVID-19 pandemic’s lockdowns, Americans are still spending money on their homes. But it’s no longer about making the place more attractive to prospective buyers—it’s about making the house feel comfortable and convenient while they live there.
This trend has been good news for home improvement retailers like Home Depot, which saw its revenue climb during the pandemic’s first two years. But the boom in remodeling is now fading, thanks to stagnant economic conditions and worries about inflation and the possibility of a recession.
In 2021, homeowners spent about $624 billion on projects to improve their homes, according to the American Housing Survey. During this time, the surge in home improvement was driven by middle-income households doing moderately priced DIY projects. It was not, as some have suggested, a sign of pent-up consumer demand for bigger-ticket items such as kitchen remodels and new roofs.
The most popular projects were sparkling bathroom overhauls, followed by basement renovations and a kitchen update. However, these projects rarely yield a great return on investment. In fact, most projects don’t recoup more than half of their cost, and the returns are especially low for those with high upfront costs such as a kitchen remodel or installing a basement bar.
A recent report from the National Association of Realtors shows that the number of home sales is declining, and that could mean fewer people are investing in home improvements. That’s because home sale activity typically drives remodeling and repair spending. It is also important to ensure that any improvements are consistent with the style of your house and the neighborhood you live in. If every other house in your neighbohood has an in-ground pool, for example, adding one to your home might make it look out of place.
When choosing a contractor for any home improvement project, it is essential to check whether they are licensed and insured. In addition, they should provide a written contract with a detailed timeline for work to be completed, a payment schedule and as many specifics as possible about the work and materials being used, such as brands of products or the type of paint being used. The contract should also specify that the homeowner is required to withhold final payment until all inspections and certificates of occupancy have been obtained.
Finally, the homeowner should always get a quote from several contractors before hiring anyone. It is important to compare prices, quality and workmanship to find the best contractor for the job. The homeowner should also take the time to review past work done by the contractor and ask for references from previous clients.