This Is How Much People Spent on Home Renovations in 2018
The 2019 U.S. Houzz & Home report reveals median renovation spending amount, payment methods and more
A typical renovating homeowner spent $15,000 on home renovation projects in 2018, according to the 2019 U.S. Houzz & Home report. The numbers are in line with renovation spending amounts for the past two years, confirming that industry activity continued at a steady pace through 2018. Plus, 2019 looks like it will be a strong year for the renovation industry, with more than half of U.S. homeowners on Houzz planning to start renovation projects this year.
The U.S. Houzz & Home survey is the largest publicly available survey of residential remodeling, building and decorating activity in the U.S. The survey, fielded between February 13 and April 16, 2019, collected information from 142,000 registered Houzz users, including more than 67,000 homeowners who renovated their primary home in 2018. Read on for more insights from this survey.
Median Renovation Spend Held Steady in 2018
This chart using data from the study shows that, as mentioned above, a typical renovating homeowner on Houzz spent $15,000 on home renovation projects in 2018. That amount was consistent with the renovation spend for the prior two years.
Keep in mind that “typical” here refers to the median, or midpoint, spending amount for all renovating homeowners on all home renovation projects in 2018, with half spending more than $15,000 and half spending less. Economists consider the median a more useful measure than the average or mean, because that number can be skewed upward in a misleading manner by one-off projects that cost a lot more than others.
While the spending of a typical renovating homeowner held steady, the top 10 percent of spenders did not invest as much as last year. This chart also shows renovation spending by homeowners at the 90th percentile (the top 10 percent of homeowners in terms of their renovation spend). For the top 10 percent of renovating homeowners, renovation spending started at $80,000 and went up from there. That’s a bit less than the $85,000 starting point for this elite group in 2017 and the $90,000 starting point in 2016.
Where is all this money going? In 2018, homeowners renovated an average of 2.8 interior rooms; upgraded 2.7 home systems, such as electrical, plumbing and air conditioning; and did 2.4 exterior upgrades.
One-Quarter of Renovators Spent Between $10,000 and $24,999
Of course, the median renovation spending amount captures just that — the median, meaning the midpoint spending amount — and by definition people frequently spend more or less than this number. This chart shows the distribution of homeowner spending amounts for the past three years. The green bars represent 2018. It’s important to note that these numbers include renovations that were done as DIY projects as well as those in which pros were involved. The numbers cover the costs of design plans, permits, materials and construction labor for renovation projects.
As the chart shows, last year 27 percent of homeowners who renovated spent $10,000 to $24,999.
Seventeen percent of homeowners who renovated spent $25,000 to $49,999. Just as many (17 percent) spent between $5,000 and $9,999, and even more (19 percent) spent between $1,000 and $4,999.
Eleven percent of renovating homeowners spent $50,000 to $99,999 last year, and 9 percent spent $100,000 or more.
A Strong Renovation Forecast for 2019
Fifty-one percent of U.S. homeowners on Houzz plan to start renovation projects in 2019, and a typical renovating homeowner anticipates spending $10,000 on home renovations this year.
At the 90th percentile, Houzz homeowners who plan to renovate this year anticipate spending $50,000. That’s quite a bit less than the $80,000 that homeowners at the 90th percentile said they spent on renovations in 2018. The gap — anticipated spending amounts for 2019 versus actual spending amounts for 2018 — is not surprising. Commonly, renovating homeowners underestimate how much a renovation will cost and find that they spend more on projects than they initially expected.
Cash Is Still King, but Credit Card Usage Is Growing
Cash is still by far the primary method for paying for home renovations, chosen by 83 percent of renovating homeowners. But paying for home remodels and additions with a credit card is on the rise. In 2018, 37 percent of renovating homeowners used this payment method, compared with 33 percent in 2017.
Interestingly, as project spending rises, homeowners are less likely to use credit cards as a payment method and more likely to take out a secured home loan or use cash from a previous home sale, a gift, an inheritance or an insurance payout.
The Houzz & Home report also tracks median renovation spending amounts in the largest (in terms of population) 50 metropolitan areas in the U.S.
Spending was highest in the greater metro areas of San Jose and San Francisco, California ($25,000 each), and lowest in Buffalo, New York; Cincinnati and Cleveland, Ohio; Nashville, Tennessee; Oklahoma City; Orlando, Florida; and Raleigh, North Carolina ($10,000 each).
Last year only six of the 50 metros had a year-over-year increase in median spending amounts on home renovations. That’s notably fewer cities than during the previous two years: In 2017, 12 metro areas saw year-over-year increases, while in 2016, 16 metros did. And in fact, in 2018 half (25) of the metro areas Houzz tracks experienced a drop in median renovation spending amount.
These changes are likely due to a shift to smaller projects for renovating homeowners compared to prior years. “We are moving into an economic cycle with a more moderate rate of growth relative to before,” says Nino Sitchinava, Houzz’s principal economist.
Erin Carlyle June 5, 2019 | houzz.com