Financing |Negotiate and Navigate Options | HouseLogic

America’s Renovation Boom Is Leveling Off—but Still Going Strong

Fri, 18 Oct 2024 20:06:00 GMT

Americans are still renovating up a storm—although not as much as they did during the COVID-19 pandemic.

Spending on home improvements and maintenance is expected to grow from its current $472 billion to $477 billion by the third quarter, a modest increase of 1.2%, according to the latest Leading Indicator of Remodeling Activity report released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.

To develop its projections, the LIRA team examines various indicators, including building materials sales and the number of remodeling permits issued.

The 1.2% increase is a sign that the market might be leveling off and correcting from the pandemic when homeowners were spending more time and money on home projects. Plus, low interest rates at the time motivated sellers to make their homes as up-to-date as possible for the market.

That led to what Abbe Will , associate director of the Remodeling Futures Program, called “the big boom,” where the renovation market increased by 10% to 15%.

The boom suggested that “it was people catching up on work that they already wanted to do,” Will explains.

“It was also probably people doing work that they hadn’t quite planned to do, but it was just a convenient time, a better time. I think this is a little bit of a resetting to more normal rates, although we’re not there yet,” she says. “Even though growth in the market hasn’t been the raging 10% year over year or 15% year-over-year growth that we saw during the first couple of years of the pandemic, we’re still expecting a lot of spending.”

Despite the market slowdown over the past couple of years, Will says there’s “still a phenomenal amount of spending—way more spending than what we saw in 2019, before the pandemic.”

Why renovation spending is slated to grow into next year

It’s no surprise that we’re seeing a steady increase in renovation spending now.

“A continued thaw in new-home construction and sales of existing homes bodes well for an uptick in residential improvement and repairs next year,” Carlos Martín , director of the Remodeling Futures Program at the Joint Center for Housing Studies, said in a statement. “Additionally, stronger gains in home values and thus home equity levels should boost both discretionary and ‘need-to-do’ replacement projects for owners staying in place.”

The LIRA report comes alongside a new survey from the brokerage Clever Real Estate on attitudes and trends among renovations. Clever Real Estate surveyed 1,000 American homeowners and found that 63% would rather remodel their current homes than move into a home that’s already been renovated.

Homeowners surveyed were fairly split on why they were renovating. When given the choice to select multiple options, 35% said they’d renovated to repair damage, while 35% said they were motivated to renovate for increased comfort. And 32% said they did it to improve the livability of their home, while 32% cited improving their home’s aesthetic appeal. Meanwhile, 31% said they renovated to personalize their home, and 30% said they did it to increase their home’s value.

Yet some homeowners who completed renovation and maintenance projects faced struggles, with 41% reporting significant delays in the work and 78% admitting to going over budget on their last renovation project.

According to the study, the most popular major renovations were bathroom remodels (37%), interior painting (33%), and heating and air-conditioning upgrades (30%). The most common minor renovations were installing new faucets (36%), installing new light fixtures (35%), and making small kitchen updates (34%).

How Much Does It Cost To Sell My House?

Thu, 10 Oct 2024 10:30:00 GMT

If you’re toying with the idea of selling your house, you’re probably wondering how much it’ll cost.

Mortgage Calculator: This Is How Much You Need To Buy a $425,000 Home With a 6.12% Rate

Fri, 04 Oct 2024 17:00:00 GMT

Mortgage rates this week for a 30-year fixed loan, but home prices are falling—from $429,990 in August to $425,000 in September .

So how do these changes affect your mortgage monthly payment?

Here’s how much it costs per month to buy a typical home today, according to the Realtor.com® mortgage calculator .

Monthly mortgage payment today, with a 20% down payment

The typical monthly payment at today’s 6.12% mortgage rate on a median-priced $425,000 home is roughly $2,065. (That’s assuming a 20% down payment and excluding tax and insurance.)

Compare that with last week’s 6.08% mortgage rate, a median-priced $425,000 home would cost homebuyers $2,056 per month. So, buyers who lock in the most recent rates today save nine bucks per month compared with those who closed the deal last week.

Yet if you compare a homebuyer’s mortgage payments today with when mortgage rates peaked at 7.79% in October 2023, the savings are much more substantial. Buyers who buy today versus back then are saving $380 per month.

Monthly mortgage payment with a 3.5% down payment

Assuming a 3.5% down payment and excluding tax and insurance, the typical monthly payment at today’s 6.12% mortgage rate is roughly $2,491 on a median-priced home.

Compare that with last week’s 6.08% mortgage rate, a median-priced $425,000 home would cost homebuyers $2,480 per month—11 bucks less than what buyers pay today.

However, this is a $459-per-month improvement compared with when rates peaked at 7.79% in October 2023.

Overall, it’s clear that mortgage fluctuations week to week can save homebuyers a bit of cash, but buyers who played the waiting game and held off on buying when rates peaked a year ago are enjoying some far more substantial savings.

Add up those monthly savings over the life of a 30-year mortgage, and the benefits of buying a house at a low rate become abundantly clear.

At today’s 6.12% rate for a $425,000 house and assuming a 20% down payment, homeowners will pay a total of $743,320 over the life of a 30-year fixed loan.

At October’s peak mortgage rate of 7.79%, that same $425,000 house would cost homeowners $880,274.

Total savings over 30 years: $136,954.